Acceso usuarios
Michele Fabrizi
Purpose The paper aims at investigating the economic determinants and the effects on firm value of the Chief Marketing Officer�s (CMO) equity incentives.
Design/methodology/approach The empirical analysis uses 586 firm-year observations corresponding to 227 unique firms collected from Execucomp dataset over the period 2000-2009.
Findings The paper documents that i) when a firm�s marketing intensity increases, the CMO�s equity incentives significantly increase; ii) CMO�s equity incentives are positively related to shareholder value, and this positive relationship is incremental to that between the CEO�s equity incentives and firm value; iii) the positive impact of the CMO�s equity incentives on the firm value is partially mediated by marketing investments.
Research limitations/implications The paper helps to understand under which circumstances firms provide the CMO with high equity incentives and what the performance implications are of providing the CMO with long-term incentives.
Practical implications Results indicate that companies should try to incent the CMO with equity-based incentives because the CMO can boost shareholder value on a way that is incremental to how the CEO does so. As a consequence, if the board of directors decides not to provide the CMO with sufficient equity incentives, it is likely that this decision will be suboptimal for shareholders.
Originality/value This paper is the first to analyze the structure and effect on firm value of the CMO�s compensation in answer to calls for research on compensation of executives other than CEOs.
