HOME » Publications » Economic Review

Abstract

Vol. 53, No. 2, pp. 151-161 (2002)

“Directors' Bonus and 'Main Bank' Relationship”
Naohito Abe (The Institute of Economic Research, Hitotsubashi University), Katsuyuki Kubo (The Institute of Economic Research, Hitotsubashi University)

Many studies have been done on the effect of 'main bank' relationship on the fluctuation of firms' performance. We analyse the relationship between directors' incentives and the 'main bank' relationship, with particular emphasis on the fluctuation of the directors' bonus. We find that the variance of the directors' bonus is significantly smaller in a firm with stable 'main bank' relationship after controlling the fluctuation of firm's performance, using 56 firm data in 1989-1999. In addition, we employ stochastic production frontier analysis to show that the performance of the firm with stable 'main bank' relationship is lower.