Does National Culture Impact Pay-for-Performance and Gender Pay-Gap in Executive Compensation?
Posted: 10 Aug 2021
Date Written: February 28, 2020
The paper examines the impact of culture on executive compensation. Using a sample of 8025 firms from 17 countries and employing GLOBE cultural dimensions, we find that culture has a significant explanatory power in cross-country executive compensation practices. We contribute to the existing literature by demonstrating how culture affects the relationship between performance and compensation as well as compensation disparity in the boardroom. In particular, we find that in assertive and individualistic societies, compensation is closely related to performance and that compensation disparity is lower among the top management team. Our results reveal more insights on the relationship between culture and compensation practices.
Keywords: CEO, Compensation, Culture, GLOBE, Pay-gap, Pay-for-Performance
JEL Classification: G14, G31
Suggested Citation: Suggested Citation