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

Cynthia J. Campbell (), Rosita P. Chang (), Jack C. DeJong (), Robert Doktor (), Lars Oxelheim and Trond Randøy ()
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Cynthia J. Campbell: Iowa State University
Rosita P. Chang: University of Hawaii at Manoa
Jack C. DeJong: Nova Southeastern University
Robert Doktor: University of Hawaii at Manoa
Trond Randøy: University of Agder

Asian Economic Papers, 2016, vol. 15, issue 2, 109-133

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.

Date: 2016
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