Stakeholder-Oriented Corporate Governance and Firm-Specific Human Capital:
Wage analysis of employer-employee matched data

Author Name ODAKI Kazuhiko  (Senior Fellow, RIETI) /KODAMA Naomi  (Consulting Fellow, RIETI)
Creation Date/NO. March 2010 10-E-014
Research Project The Frontier of Corporate Governance Analysis: Evolution of the corporate system in Japan and the impact of the world financial crisis
Download / Links


Theories of economic institutions predict that complementarity exists between the nature of corporate governance of a firm and the nature of its human capital investment. The complementarity theory insists that the commitment of a firm and its employees to invest in firm-specific human capital will be reinforced by the commitment of the firm to adopt stakeholder-oriented corporate governance. Using employer-employee matched data from the headquarters of large Japanese firms, this paper investigates the relationship between the wage-tenure profile of a firm and the nature of its corporate governance. Analysis of the wage-tenure profiles shows that firms with stakeholder-oriented corporate governance invest in firm-specific human capital more heavily than those with shareholder-oriented corporate governance.