6533b824fe1ef96bd1280877

RESEARCH PRODUCT

Executive Incentive Compensation and Economic Prosperity

Trond RandøyLars OxelheimLars OxelheimLars OxelheimCynthia J. CampbellJack De Jong Jr.Robert DoktorRosita P. Chang

subject

Labour economicsIncentiveExecutive compensationmedia_common.quotation_subjectCompensation (psychology)EconomicsPer capitaProsperityInvestment (macroeconomics)Term (time)media_commonPanel data

description

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.

yearjournalcountryeditionlanguage
2008-01-01SSRN Electronic Journal
https://doi.org/10.2139/ssrn.1147624