Journal or Book Title
Markets and Compensation for Executives in Europe
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.
Campbell, Cynthia J.; Chang, Rosita P.; Doktor, Robert; De Jong, Jack C. Jr.; and Randøy, Trond, "Executive Incentive Compensation and Economic Prosperity" (2008). Finance Publication. 4.