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CMO equity incentive and shareholder value: Moderating role of CMO managerial discretion

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  • Kim, MinChung
  • Boyd, D. Eric
  • Kim, Namwoon
  • Yi, Cheong H.

Abstract

Chief marketing officers (CMOs) are the marketing leaders in their respective firms and are responsible for creating shareholder value. To incentivize CMOs to focus on shareholders' interests, an increasing number of firms are compensating their CMOs with equity. This study examines the impact of CMO equity incentive on shareholder value and introduces three different forms of managerial discretion given to CMOs as contingencies determining when the impact of CMO equity incentive is more or less. Results based on CMO compensation data from 1993 to 2009 confirm the value relevance of CMO equity incentive above and beyond equity incentive allocated to other TMT members. Furthermore, the results reveal support for the moderating effect of financial, strategic, and operational forms of CMO managerial discretion. Theoretically, the findings identify hitherto unrecognized boundary conditions determining when the impact of CMO equity on shareholder value is higher or lower and address several limitations characterizing past research on the topic. Managerially, the results can guide firms in structuring CMO compensation and discretion in ways that optimize the effect of CMOs on shareholder value.

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  • Kim, MinChung & Boyd, D. Eric & Kim, Namwoon & Yi, Cheong H., 2016. "CMO equity incentive and shareholder value: Moderating role of CMO managerial discretion," International Journal of Research in Marketing, Elsevier, vol. 33(4), pages 725-738.
    • Handle: RePEc:eee:ijrema:v:33:y:2016:i:4:p:725-738
    DOI: 10.1016/j.ijresmar.2016.09.001
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    Cited by:

    1. Ya You & Shuba Srinivasan & Koen Pauwels & Amit Joshi, 2020. "How CEO/CMO characteristics affect innovation and stock returns: findings and future directions," Journal of the Academy of Marketing Science, Springer, vol. 48(6), pages 1229-1253, November.
    2. Kimberly A. Whitler & Ben Lee & Ryan Krause & Neil A. Morgan, 2021. "Upper echelons research in marketing," Journal of the Academy of Marketing Science, Springer, vol. 49(1), pages 198-219, January.
    3. Bendig, David, 2022. "Chief operating officer characteristics and how they relate to exploration via patenting versus venturing," Journal of Business Research, Elsevier, vol. 140(C), pages 297-309.
    4. Cecilia Wiedeck & Andreas Engelen, 2018. "The copycat CMO: firms’ imitative behavior as an explanation for CMO presence," Journal of the Academy of Marketing Science, Springer, vol. 46(4), pages 632-651, July.
    5. MinChung Kim & Guiyang Xiong & Kwang-Ho Kim, 2018. "Where does pride lead? Corporate managerial hubris and strategic emphasis," Journal of the Academy of Marketing Science, Springer, vol. 46(3), pages 537-556, May.
    6. Feng, Cong & Fay, Scott, 2021. "Chief stores officer and retailer performance," Journal of Retailing and Consumer Services, Elsevier, vol. 58(C).
    7. Sharma, Amalesh & Yashaswy Akella, Laxminarayana & Bikash Borah, Sourav, 2022. "Knowledge structure of Chief Marketing Officers (CMOs): A review, bibliometric analysis, and research agenda," Journal of Business Research, Elsevier, vol. 151(C), pages 448-462.
    8. Saeed Janani & Ranjit M. Christopher & Atanas Nik Nikolov & Michael A. Wiles, 2022. "Marketing experience of CEOs and corporate social performance," Journal of the Academy of Marketing Science, Springer, vol. 50(3), pages 460-481, May.
    9. Wang, Xinchun, 2024. "Does CEO temporal myopia always lead to firm short-termism? The critical role of CEO optimism and perceived opportunity costs," Journal of Business Research, Elsevier, vol. 180(C).
    10. Feng, Cong & Xiang, Kexin, 2023. "Structural power of female executives and retailer profitability: A contingent resource-based perspective," Journal of Business Research, Elsevier, vol. 168(C).
    11. Kimberly A. Whitler & Ben Lee & Sarah Young, 2022. "The impact of boards of directors on chief marketing officer performance: Framing and research agenda," AMS Review, Springer;Academy of Marketing Science, vol. 12(1), pages 116-136, June.
    12. V. Kumar & Sourav Bikash Borah & Amalesh Sharma & Laxminarayana Yashaswy Akella, 2021. "Chief marketing officers’ discretion and firms’ internationalization: An empirical investigation," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(3), pages 363-387, April.
    13. Ivan Guitart & Manfred Schwaiger & Johanna Eberhardt, 2024. "How and Why Does Corporate Reputation Moderate Mass Media News’ Impact On Market Value?," Post-Print hal-04346339, HAL.
    14. Pravin Nath & Neeraj Bharadwaj, 2020. "Chief marketing officer presence and firm performance: assessing conditions under which the presence of other C-level functional executives matters," Journal of the Academy of Marketing Science, Springer, vol. 48(4), pages 670-694, July.

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