The Impact of CEO Long-Term Equity-Based Compensation Incentives on Economic Growth in Collectivist Versus Individualist Countries

Asian Economic Papers 15(2), 109–133

42 Pages Posted: 9 Oct 2015 Last revised: 27 Oct 2016

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

Jack De Jong

Nova Southeastern University

Robert Doktor

University of Hawaii at Manoa

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: September 15, 2015

Abstract

This study examines the impact of the prevalence of long-term equity-based CEO compensation incentives on GDP growth, and we address the moderating role of individualist versus collectivist cultures on this relationship. We argue 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 twenty-two nations over a five-year period, we find that when a 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.

Keywords: Executive compensation, CEO incentives, economic growth, individualist vs.collectivist countries

JEL Classification: G30, G32, G34

Suggested Citation

Campbell, Cynthia J. and Chang, Rosita P. and De Jong, Jack and Doktor, Robert and Oxelheim, Lars and Randøy, Trond, The Impact of CEO Long-Term Equity-Based Compensation Incentives on Economic Growth in Collectivist Versus Individualist Countries (September 15, 2015). Asian Economic Papers 15(2), 109–133, Available at SSRN: https://ssrn.com/abstract=2670669 or http://dx.doi.org/10.2139/ssrn.2670669

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

Jack De Jong

Nova Southeastern University ( email )

3301 College Avenue
Ft. Lauderdale, FL 33314
United States
808-387-2027 (Phone)

Robert Doktor

University of Hawaii at Manoa ( email )

2500 Campus Road
Honolulu, HI NA 96822
United States

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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