Selection Benefits of Stock-Based Compensation for the Rank-and-File

• 成果类型: Article
• 署名作者: Hales, Jeffrey; Wang, Laura W.; Williamson, Michael G.
• 署名单位: University System of Georgia; Georgia Institute of Technology; University of Illinois System; University of Illinois Urbana-Champaign; University of Texas System; University of Texas Austin
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-50962
• 发表日期: 2015
• 页码: 1497-1516
• 关键词: performance-based compensation; task-performance; optimism; incentives; overconfidence; FRAMEWORK; employees; options; FIRMS; RISK

摘要

We investigate a potential selection benefit of stock-based compensation for rank-and-file employees, whose pay under this compensation form is insensitive to their individual efforts. We use a laboratory experiment to demonstrate that individuals with higher levels of dispositional optimism are more likely to choose compensation that is contingent on a company's future stock price than to choose fixed pay, even after controlling for the individual's risk preferences. Furthermore, compared to participants selecting fixed pay, those selecting stock-based compensation also perform better on a challenging problem-solving task, a result that we show is due to their higher levels of dispositional optimism. Collectively, we demonstrate that stock-based compensation can have productivity-enhancing effects, even if stock prices are completely insensitive to individual efforts. In doing so, we provide a partial explanation for the puzzling prevalence of stock-based compensation plans at the rank-and-file level and contribute to the broader contract-selection literature.