Executive Incentive Compensation and Economic Prosperity

MARKETS AND COMPENSATION FOR EXECUTIVES IN EUROPE, Oxelheim, L. and C. Wihlborg, eds., Bingley: Emerald Publishing, 2008

Posted: 19 Jun 2008 Last revised: 30 Jun 2020

See all articles by Cynthia J. Campbell

Cynthia J. Campbell

Iowa State University - Department of Accounting and Finance

Rosita P. Chang

University of Hawaii at Manoa - Department of Financial Economics and Institutions

Robert Doktor

University of Hawaii at Manoa

Jack De Jong

Nova Southeastern University

Lars Oxelheim

Research Institute of Industrial Economics (IFN); University of Agder; Knut Wicksell Center for Financial Studies, Lund University

Trond Randøy

University of Agder - School of Management

Date Written: June 17, 2008

Abstract

This paper analyzes the existence of a potential link between the prevalence of long term incentive compensation schemes and the economic prosperity of a country. This issue is previously not addressed in the literature. In a panel regression with fixed effects a strongly significant, positive effect is found between growth of GDP/capita in real terms and this prevalence, while controlling for general investment and institutional variables. However, when the 22 countries of the study are divided into European and non-European, the growth effect found for the entire material accrues only to the non-European countries. It is concluded that long term incentive contracts seem to have no effect in the European countries due to labor market and cultural reasons.

Keywords: Executive compensation, economic growth, investment ratio, long term incentive

JEL Classification: G34, G38, M14, M52, M55

Suggested Citation

Campbell, Cynthia J. and Chang, Rosita P. and Doktor, Robert and De Jong, Jack and Oxelheim, Lars and Randøy, Trond, Executive Incentive Compensation and Economic Prosperity (June 17, 2008). MARKETS AND COMPENSATION FOR EXECUTIVES IN EUROPE, Oxelheim, L. and C. Wihlborg, eds., Bingley: Emerald Publishing, 2008, Available at SSRN: https://ssrn.com/abstract=1147624 or http://dx.doi.org/10.2139/ssrn.1147624

Cynthia J. Campbell

Iowa State University - Department of Accounting and Finance ( email )

Carver Hall
Ames, IA 50011-2063
United States
515-294-8104 (Phone)
515-294-3525 (Fax)

Rosita P. Chang

University of Hawaii at Manoa - Department of Financial Economics and Institutions ( email )

2404 Maile Way
Honolulu, HI 96822
United States

Robert Doktor

University of Hawaii at Manoa ( email )

2500 Campus Road
Honolulu, HI NA 96822
United States

Jack De Jong

Nova Southeastern University ( email )

3301 College Avenue
Ft. Lauderdale, FL 33314
United States
954-262-5157 (Phone)

Lars Oxelheim (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

P.O. Box 55665
SE-10215 Stockholm
Sweden
+46 8 665 4527 (Phone)
+46 8 665 4599 (Fax)

University of Agder ( email )

Serviceboks 422
N-4604 Kristiansand, VEST AGDER 4604
Norway

Knut Wicksell Center for Financial Studies, Lund University ( email )

P.O.Box 7080
S-220 07 Lund
Sweden
+46462228744 (Phone)

Trond Randøy

University of Agder - School of Management ( email )

Adger Research Foundation
Serviceboks 422 Bygg H
N-4604 Kristiansand
Norway
47 3814 1027 (Phone)

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