Executive compensation design remains a central issue in corporate governance, particularly regarding whether CEO pay effectively aligns managerial incentives with long-term performance. This paper analyzes the impact of equity-based compensation on firm outcomes through strategic investments and productivity, incorporating the moderating role of CEO experience. We develop a generalized structural equation model (GSEM) grounded in agency, tournament, psychological ownership, and upper echelons theories, linking incentives to R&D, advertising, productivity, and profitability (EBITDA). Based on a panel of 21,670 firm-year observations, results show that a 10-percentage-point increase in equity compensation raises R&D spending by 11.7% and advertising by 8.7%, which translate into productivity gains of 44% and 22.9%, respectively. Equity incentives also exert a direct effect, increasing productivity by 50.3%. In turn, productivity improvements also translate into stronger firm performance: a 10% increase in productivity is associated with a 0.7% increase in EBITDA. CEO experience amplifies the incentive effects on R&D and advertising but slightly dampens the direct productivity link. These findings provide robust quantitative evidence on the compensation–performance nexus.
Exponent
Marcos Gómez
M.Sc. y Ph.D. en Economía en la Universidad de Southampton
Economista y profesor asociado en la Escuela de Negocios de la UAI, Chile.
Su trabajo académico se centra en economía laboral y en modelos dinámicos de macroeconomía, además de explorar la Economía del Bienestar y su vínculo con el desempeño organizacional mediante estudios longitudinales.
