Determinants of executive compensation in privately held firms |
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Authors: | Jesper Banghøj Gorm Gabrielsen Christian Petersen Thomas Plenborg |
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Affiliation: | 1. Department of Accounting and Auditing;2. Center for Statistics, Copenhagen Business School, DK‐2000 Frederiksberg, Denmark |
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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. |
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Keywords: | Board characteristics Compensation contracts Executive characteristics Performance measures Quality of bonus plans M52 Compensation and Compensation Methods and Their Effects |
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