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

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Listed:
  • Rebel A. Cole

    (DePaul University)

  • Hamid Mehran

    (Federal Reserve Bank of New York)

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.

Suggested Citation

  • Rebel A. 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:d:10.1007_s11187-015-9689-2
    DOI: 10.1007/s11187-015-9689-2
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    2. Manika Kohli, 2018. "Impact of Ownership Type and Board Characteristics on the Pay–Performance Relationship: Evidence from India," Indian Journal of Corporate Governance, , vol. 11(1), pages 1-34, June.
    3. Cole, Rebel & Sokolyk, Tatyana, 2016. "Who needs credit and who gets credit? Evidence from the surveys of small business finances," Journal of Financial Stability, Elsevier, vol. 24(C), pages 40-60.
    4. Sheedy, Elizabeth & Zhang, Le & Liao, Yin, 2023. "Deferred pay: Compliance and productivity with self-selection," Journal of Banking & Finance, Elsevier, vol. 154(C).
    5. Elkinawy, Susan & Hibbert, Ann Marie & Talukdar, Bakhtear, 2023. "Gender differences in CEO risk tolerance: A look at fixed pay," Global Finance Journal, Elsevier, vol. 57(C).
    6. Nguyen, Thi Hong Hanh & Ntim, Collins G. & Malagila, John K., 2020. "Women on corporate boards and corporate financial and non-financial performance: A systematic literature review and future research agenda," International Review of Financial Analysis, Elsevier, vol. 71(C).
    7. 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.
    8. 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.
    9. repec:aly:journl:201819 is not listed on IDEAS
    10. 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;
    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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