This paper explores the impact of corporate control, measured by ownership structure, on top-executives’ compensation in Japan. According to agency theory, the pay-performance link is expected to be affected by the firm’s ownership structure. Using a sample of 4,411 firm-year observations (401 firms for the 11-years period from 2001 to 2011) for Japanese non-financial firms publicly traded on the first section and second section of the Tokyo Stock Exchange (TSE), this study demonstrates that institutional ownership (both financial and corporate) is negatively related to the level of executives’ compensation. Such finding is in line with efficient monitoring hypothesis which claims that the presence of institutional shareholders provides direct monitoring over managers, limits managerial self-dealing and curves the increase in top-executives pay. On the other hand, the results also show that managerial ownership is positively related to their compensation which supports managerial power theory hypothesis, i.e. management-controlled firms are more likely to extract more compensation from the business than other firms. Overall, this study confirms that corporate control has significant impact on cash compensation paid to Japanese top-executives after controlling the conventional pay-performance relationship.

1. Introduction
 2. Theoretical Background and HypothesesDevelopment
 3. Research Design
  3.1. Basic Equation
  3. 2. Empirical Models
  3.3. Variable Descriptions
   3.3.1. Dependent Variable: ExecutiveCompensation (COMP)
   3.3.2. Research Variable: Corporate Performance(EARN)
   3.3.3. Research Variable: Corporate Control
   3.3.4. Control Variables
  3.4. Sample Selection and Source of Data
 4. Empirical Results and Discussion
  4.1. Descriptive Statistics and Collinearity Results
  4.2. Regression Results
  4.3. Robustness and Further Analysis
 5. Summary and Conclusion
 References

• Mohammed Mehadi Masud Mazumder(Department of Accounting & Information Systems, University of Dhaka)