The alignment effects of CEO stock incentives in the presence of government ownership: International evidence from Gulf Cooperation Council countries

This article investigates whether government ownership in publicly-listed firms of Gulf Cooperation Council (GCC) countries affects the behaviour of CEOs who are granted stock incentives, that is, an ownership stake in these firms. The results suggest that government ownership may create an environm...

Full description

Saved in:
Bibliographic Details
Published in:Australian journal of management 2020-05, Vol.45 (2), p.195-222
Main Authors: Agha, Mahmoud, Eulaiwi, Baban
Format: Article
Language:English
Subjects:
Chief executive officers
Cooperation
Decision making
Finance
Government ownership
Incentives in industry
Stocks
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:This article investigates whether government ownership in publicly-listed firms of Gulf Cooperation Council (GCC) countries affects the behaviour of CEOs who are granted stock incentives, that is, an ownership stake in these firms. The results suggest that government ownership may create an environment that could be abused by these managers. In particular, we find that when government ownership reaches a certain threshold, the alignment effect of CEO stock incentives is reversed such that borrowing increases; capital expenditure decreases; selling, general and administrative (SGA) expenses increase; and firm performance decreases with the level of CEO stock incentives. Our results could have implications for investors and policymakers in GCC countries, and other developing markets, where governments usually have substantial equity stakes in some publicly listed firms.
ISSN:0312-8962
1327-2020
DOI:10.1177/0312896219893730