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CEO Compensation, Incentives and Governance in New Enterprise Firms

Research output: Contribution to journalJournal article

Published
<mark>Journal publication date</mark>2004
<mark>Journal</mark>Journal of Derivatives Accounting
Issue number1
Volume1
Number of pages14
Pages (from-to)47-60
Publication statusPublished
Original languageEnglish

Abstract

This study investigates executive compensation, corporate governance and the determination of CEO equity incentives in US entrepreneurial high technology firms. We find the following. First, CEO equity incentives in these new enterprise firms are twenty times larger than that which previous large firm studies have found. Second, both economic factors (firm size, growth opportunities, and risk) and governance factors (founder, venture capitalist presence, board structure, and ownership distribution) determine CEO incentives in these firms. We document instances where direct monitoring arrangements (e.g. venture capitalist monitoring) act as substitutes for explicit incentives in aligning shareholder and CEO interests.