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Journal of Business Ethics
Published in: Journal of Business Ethics 1/2013

01-08-2013

Compensating Outside Directors with Stock: The Impact on Non-Primary Stakeholders

Authors: Yuval Deutsch, Mike Valente

Published in: Journal of Business Ethics | Issue 1/2013

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Abstract

Two obvious trends in corporate governance include broadening board accountability beyond shareholders’ interests and paying outside directors with equity compensation (stock and stock options). By integrating common agency and instrumental stakeholder theories, we examine the effect of stock compensation on secondary stakeholders and a firm’s participation in social issues, two areas where interests are less aligned with shareholder value. Consistent with our predictions, we found that while stock compensation may be an effective way to align directors’ goals to those of shareholders, it has adverse effects on important non-shareholder constituencies in the company’s operating environment.
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Metadata
Title
Compensating Outside Directors with Stock: The Impact on Non-Primary Stakeholders
Authors
Yuval Deutsch
Mike Valente
Publication date
01-08-2013
Publisher
Springer Netherlands
Published in
Journal of Business Ethics / Issue 1/2013
Print ISSN: 0167-4544
Electronic ISSN: 1573-0697
DOI
https://doi.org/10.1007/s10551-012-1447-7

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