Journal of Management 2005

The Impact of Ownership Structure on Wage Intensity in Japanese Corporations

Toru Yoshikawa¹; Phillip Phan²; Parthiban David³

¹ Singapore Management University · ² Rensselaer Polytechnic Institute · ³ University of Notre Dame

Abstract

The authors studied the effect of ownership structure on human capital investments as indicated by wage intensity, defined as the ratio of expenditure on employee wages to sales, in a sample of 996 Japanese manufacturing firms during their economic recession of 1998-2002. They found that domestic shareholders, with interests beyond financial considerations, enhance wage intensity, especially when performance is low, and thereby safeguard human capital investments. Foreign shareholders with sole interest in financial returns have an opposite effect; they reduce wage intensity when firm performance is low.

DOI

10.1177/0149206304271766

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