Religiosity and the Use of Performance-Based Compensation
This study examines how a firm’s religious culture affects the structure of CEO compensation. I consider two characteristics of religious cultures that are likely to have implications on executive compensation structure – the sensitivity of economic agents to financial rewards (extrinsic motivation)...
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| Format: | Article |
| Language: | English |
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Pompea College of Business
2025-05-01
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| Series: | American Business Review |
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| Online Access: | https://digitalcommons.newhaven.edu/americanbusinessreview/vol28/iss1/7/ |
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| _version_ | 1849689526533881856 |
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| author | Edward Kim |
| author_facet | Edward Kim |
| author_sort | Edward Kim |
| collection | DOAJ |
| description | This study examines how a firm’s religious culture affects the structure of CEO compensation. I consider two characteristics of religious cultures that are likely to have implications on executive compensation structure – the sensitivity of economic agents to financial rewards (extrinsic motivation) and the extent to which agents’ actions can affect future outcomes (locus of control). I hypothesize that religious cultures’ attitudes toward both characteristics will lead to less use of performance-based compensation in religious cultures and show evidence consistent with the hypothesis. Further tests show that the relationship is primarily driven by religious cultures’ perception of extrinsic motivation. Using corporate headquarters relocations as a shock to a firm’s culture, I show that the relationship is causal. |
| format | Article |
| id | doaj-art-fd6c02797a8048e6bc874ddd7911efc2 |
| institution | DOAJ |
| issn | 0743-2348 2689-8810 |
| language | English |
| publishDate | 2025-05-01 |
| publisher | Pompea College of Business |
| record_format | Article |
| series | American Business Review |
| spelling | doaj-art-fd6c02797a8048e6bc874ddd7911efc22025-08-20T03:21:35ZengPompea College of BusinessAmerican Business Review0743-23482689-88102025-05-0128114316010.37625/abr.28.1.143-160Religiosity and the Use of Performance-Based CompensationEdward Kim0Western Michigan University, Michigan, U.S.A.This study examines how a firm’s religious culture affects the structure of CEO compensation. I consider two characteristics of religious cultures that are likely to have implications on executive compensation structure – the sensitivity of economic agents to financial rewards (extrinsic motivation) and the extent to which agents’ actions can affect future outcomes (locus of control). I hypothesize that religious cultures’ attitudes toward both characteristics will lead to less use of performance-based compensation in religious cultures and show evidence consistent with the hypothesis. Further tests show that the relationship is primarily driven by religious cultures’ perception of extrinsic motivation. Using corporate headquarters relocations as a shock to a firm’s culture, I show that the relationship is causal.https://digitalcommons.newhaven.edu/americanbusinessreview/vol28/iss1/7/ceo compensationincentive paycorporate governancecorporate culturereligiosity |
| spellingShingle | Edward Kim Religiosity and the Use of Performance-Based Compensation American Business Review ceo compensation incentive pay corporate governance corporate culture religiosity |
| title | Religiosity and the Use of Performance-Based Compensation |
| title_full | Religiosity and the Use of Performance-Based Compensation |
| title_fullStr | Religiosity and the Use of Performance-Based Compensation |
| title_full_unstemmed | Religiosity and the Use of Performance-Based Compensation |
| title_short | Religiosity and the Use of Performance-Based Compensation |
| title_sort | religiosity and the use of performance based compensation |
| topic | ceo compensation incentive pay corporate governance corporate culture religiosity |
| url | https://digitalcommons.newhaven.edu/americanbusinessreview/vol28/iss1/7/ |
| work_keys_str_mv | AT edwardkim religiosityandtheuseofperformancebasedcompensation |