Borrowing from employees to fund marketing: stock-based compensation (SBC) as an internal financing mechanism

Chun Lu; Ferdinand A. Gul; Michael T. Ewing

doi:10.1080/0965254X.2026.2680941

Back

Borrowing from employees to fund marketing: stock-based compensation (SBC) as an internal financing mechanism

Journal article

Open access

Peer reviewed

Borrowing from employees to fund marketing: stock-based compensation (SBC) as an internal financing mechanism

Chun Lu, Ferdinand A. Gul and Michael T. Ewing

Journal of Strategic Marketing, Vol.Advanced access

12-Jun-2026

DOI: https://doi.org/10.1080/0965254X.2026.2680941

Files and links (1)

pdf

Borrowing from employees to fund marketing stock-based compensation SBC as an internal financing mechanism1.87 MBDownload View

Published Version (Advanced Access) Open Access CC BY-NC-ND V4.0

Abstract

Employee financing

marketing–finance interface

stock-based compensation

This study examines stock-based compensation (SBC) as an internal financing mechanism to fund marketing. Using data from listed firms, we show that marketing expenditures mediate the relationship between SBC and customer satisfaction, and that SBC strengthens the link between customer satisfaction and firm value. SBC not only aligns employee incentives with shareholder interests but also frees cash through deferred wages, enabling sustained marketing investment to improve customer satisfaction. Further analyses reveal a dual-channel mechanism, whereby SBC increases both the level and the effectiveness of marketing, such that firms with higher SBC achieve greater customer satisfaction returns. The results are robust across models using both observed and predicted customer satisfaction scores. By conceptualising employee equity as a source of internal capital, the study also broadens the understanding of how compensation design can support intangible investment under financial constraints. These findings extend the pecking order theory by demonstrating that firms prioritise employee-based internal financing for marketing investments before turning to debt or external equity. Overall, the study highlights the strategic value of integrating compensation policy, marketing investment, and firm value creation, advancing research at the marketing–finance interface.

Details

Title: Borrowing from employees to fund marketing: stock-based compensation (SBC) as an internal financing mechanism
Authors: Chun Lu - Hitotsubashi University
Ferdinand A. Gul - University of the Sunshine Coast
Michael T. Ewing (Corresponding Author) - Southern Cross University
Publication details: Journal of Strategic Marketing, Vol.Advanced access
Publisher: Routledge
DOI: 10.1080/0965254X.2026.2680941
ISSN: 1466-4488
Copyright note: © 2026 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group. This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives License (http://creativecommons.org/licenses/by-nc-nd/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited, and is not altered, transformed, or built upon in any way. The terms on which this article has been published allow the posting of the Accepted Manuscript in a repository by the author(s) or with their consent.
Organisation Unit: School of Business and Creative Industries
Language: English
Record Identifier: 991241454402621
Output Type: Journal article

Metrics

1 Record Views