Sorting Effects of Broad-Based Equity Compensation

• 成果类型: Article
• 署名作者: Tsui, David; Vance, Marshall
• 署名单位: University of Southern California; Virginia Polytechnic Institute & State University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2022.4524
• 发表日期: 2023
• 页码: 4240-4258
• 关键词: employee compensation; Equity compensation; retention; sorting; turnover

摘要

We examine the sorting role of broad-based equity pay using detailed employee-level data. We propose trust in management as an important characteristic over which equity pay sorts employees, as such pay typically leaves employees with concentrated positions in employer stock and therefore more exposed to the outcomes of management's actions. Consistent with this conjecture, we find that the relation between employees' perceptions of management's credibility and voluntary turnover intentions is significantly stronger in the presence of a broad-based equity plan. Our findings provide insight into how broad-based equity pay can improve firm performance despite theoretical challenges regarding its incentive effects.