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What do we know about executive compensation at small privately held firms?

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  • Rebel Cole
  • Hamid Mehran

Abstract

We examine executive compensation using data from two nationally representative samples of small privately held US corporations conducted 10 years apart—in 1993 and 2003. We find that executive pay at small privately held firms increases with firm size and varies widely by industry, consistent with stylized facts about executive pay at public companies. From 1993 to 2003, inflation-adjusted executive pay declined at small privately held companies, in contrast to the run-up in executive pay at large public companies over the same period. Executive pay is higher at more complex organizations, is inversely related to CEO ownership and financial risk and is related to CEO age, education and gender. Copyright Springer-Verlag (outside the USA) 2016

Suggested Citation

  • Rebel Cole & Hamid Mehran, 2016. "What do we know about executive compensation at small privately held firms?," Small Business Economics, Springer, vol. 46(2), pages 215-237, February.
    • Handle: RePEc:kap:sbusec:v:46:y:2016:i:2:p:215-237
    DOI: 10.1007/s11187-015-9689-2
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    6. Andres Felipe Cortes & Andreea N. Kiss, 2023. "Is managerial discretion high in small firms? A theoretical framework," Small Business Economics, Springer, vol. 60(1), pages 157-172, January.
    7. Jongmoo Jay Choi & Omer F. Genc & Ming Ju, 2020. "Is an M&A self‐dealing? Evidence on international and domestic acquisitions and CEO compensation," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 47(9-10), pages 1290-1315, October.
    8. Ziwen Zhu & Fei Qin, "undated". "Happier Upper Classes? €“ Do The Intra-Firm Compensation Gap And Gender Wage Discrimination Exist: Evidence From A Chinese Company Under A Two-Tier Frontier Model1," Review of Socio - Economic Perspectives 201819, Reviewsep.
    9. Suveera Gill & Manika Kohli, 2018. "Perceptual Determinants of Executive Compensation: Survey-Based Evidence from India," Indian Journal of Corporate Governance, , vol. 11(2), pages 159-184, December.

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    More about this item

    Keywords

    CEO; Compensation; Executive pay; Organizational form; SSBF; H24; H25; G32; J33; M13; M52;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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