Behavioral Agency and Social Norms.docxHuman Resource Management (2018)
Drawing on arguments from institutional theory, this study examines how social norms—specifically, local religious social norms—affect the motivational impact of equity-based incentives. We test our model using longitudinal data on local religious norms, CEO equity incentives and firm value. Consistent with our theoretical predictions, we find that local religious social norms attenuate the impact of CEO option incentives upon firm value. Furthermore, we find that the attenuating impact of local religious social norms increases with managerial discretion. These findings provide valuable insight for human resource professionals and boards aiming to design compensation contracts that are aligned with firm goals. Our findings also contribute to research on the motivational effect of equity incentives by demonstrating importance of considering the social context in which executives are embedded.
- CEO compensation,
- institutional theory,
- social networks
Publication DateWinter July 19, 2018
Citation InformationDon O'Sullivan, Leon Zolotoy and Geoffrey P Martin. "Behavioral Agency and Social Norms.docx" Human Resource Management (2018)
Available at: http://works.bepress.com/geoffrey_martin/14/