Determinants of executive compensation in privately held firms

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Determinants of executive compensation in privately held firms

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Title: Determinants of executive compensation in privately held firms
Author: Plenborg, Thomas; Petersen, Christian; Gabrielsen, Gorm; Banghøj, Jesper
Abstract: We examine what determines executive compensation in privately held firms. Our study is motivated by the fact that most studies in this area rely on data from publicly traded firms. Further, the few studies that are based on data from privately held firms only examine a limited number of determinants of executive compensation. Our findings indicate that the pay to performance relation is weak. Board size and ownership concentration are the only corporate governance characteristics that explain variations in executive compensation. Executive characteristics like skills, title and educational attainment all explain variations in executive compensation. Contrary to our expectations we do not find a stronger pay to performance relation in firms with better designed bonus plans.
URI: http://hdl.handle.net/10398/7958
Date: 2009-12-01

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