Title: Culture and executive compensation
Authors: Yang Zhao - Newcastle University (United Kingdom)
Wissam Abdallah - Lebanese American University (Lebanon) [presenting]
Abstract: Th purpose is to examine how culture impacts executive compensation. Using a sample of 5,545 firms from 16 countries and employing GLOBE cultural dimensions, we find that culture does matter in executive compensation. In particular, we find that in assertive societies CEO demands high compensation and that compensation structure is linked to firm performance. We also observed that in assertive cultures, there is larger compensation disparity among top management team. Moreover, we find that executive compensation is higher and less related to performance in collectivistic societies. We also find higher compensation disparity in the boardroom in collectivistic culture. In addition, we find that managers in countries that are characterised with high uncertainty avoidance have less equity-based compensation. Furthermore, we find that in countries with larger power distance there is more disparity in the top management group. We also investigate the impact of culture on gender pay gap. Our results show that larger proportion of discriminatory compensation gap exists in societies where male and female are more unequal. Lastly, we find that in future oriented societies managers are rewarded with more equity-based compensation, and in societies that are performance oriented, executive compensation is more likely to be linked with performance.