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Do founders matter? A study of executive compensation, governance structure and firm performance

  • He, Lerong
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    This study compares founder-CEOs and professional CEOs in newly public firms in terms of executive compensation, governance structure, and firm performance. The paper applies a series of decomposition methods to separate founders' extrinsic characteristics from their intrinsic endowments. The paper finds that founder CEOs tend to earn smaller incentive compensation and smaller total compensation than professional CEOs. Founder-managed firms are associated with higher financial performance and are more likely to survive than professional managed firms. Firms with founder-CEOs are associated with even higher financial performance when the position of CEO and chairperson of the board is combined.

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    File URL: http://www.sciencedirect.com/science/article/B6VDH-4NHV6YG-1/1/a7a5b7391222171465fbe4b9ec778a97
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    Article provided by Elsevier in its journal Journal of Business Venturing.

    Volume (Year): 23 (2008)
    Issue (Month): 3 (May)
    Pages: 257-279

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    Handle: RePEc:eee:jbvent:v:23:y:2008:i:3:p:257-279
    Contact details of provider: Web page: http://www.elsevier.com/locate/jbusvent

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