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The Impact of CEO Long-term Equity-based Compensation Incentives on Economic Growth in Collectivist versus Individualist Countries

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Listed:
  • Cynthia J. Campbell

    (Iowa State University)

  • Rosita P. Chang

    (University of Hawaii at Manoa)

  • Jack C. DeJong Jr.

    (Nova Southeastern University)

  • Robert Doktor

    (University of Hawaii at Manoa)

  • Lars Oxelheim

    (University of Agder)

  • Trond Randøy

    (University of Agder)

Abstract

This study examines the impact of the prevalence of long-term equity-based chief executive officer (CEO) compensation incentives on GDP growth, and we address the moderating role of individualist versus collectivist cultures on this relationship. We argue that long-term incentives given to CEOs in some firms may convey to other CEOs that they too may be able to receive such incentives and rewards if they emulate the incentivized and rewarded CEOs. In a longitudinal study across 22 nations over a 5-year period, we find that the higher proportion of CEOs in a country are awarded long-term equity-based incentive compensation, the greater future real GDP growth, particularly in collectivist countries.

Suggested Citation

  • Cynthia J. Campbell & Rosita P. Chang & Jack C. DeJong Jr. & Robert Doktor & Lars Oxelheim & Trond Randøy, 2016. "The Impact of CEO Long-term Equity-based Compensation Incentives on Economic Growth in Collectivist versus Individualist Countries," Asian Economic Papers, MIT Press, vol. 15(2), pages 109-133, Summer.
    • Handle: RePEc:tpr:asiaec:v:15:y:2016:i:2:p:109-133
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    File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/ASEP_a_00432
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    Cited by:

    1. Afzali, Aaron & Oxelheim, Lars & Randøy, Trond & Paulo Vieito, João, 2023. "The Impact of Relative CEO Pay on Employee Productivity," Working Paper Series 1458, Research Institute of Industrial Economics.

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