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CEO compensation in venture-backed firms

Bengtsson, Ola LU and Hand, John (2011) In Journal of Business Venturing 26(4). p.391-411
Abstract
We hypothesize that because fast-growing young companies must raise money in private capital markets that contain significant financing frictions, the CEOs of such firms will be compensated for successful fundraising. Using a sample of 1585 private venture-backed U.S. firms, we find that the cash pay of entrepreneur-CEOs is increasing in both the quantity and quality of financing secured and is more sensitive to successful fundraising the more challenging and difficult is the fundraising task. Successful fundraising also increases the gap between the pay of CEOs and other executives. Finally, we show that while VC financing dilutes the CEO's fractional equity ownership, it increases the dollar value of that ownership.
Please use this url to cite or link to this publication:
author
organization
publishing date
type
Contribution to specialist publication or newspaper
publication status
published
subject
keywords
Finance, Venture Capital, Compensation
categories
Popular Science
in
Journal of Business Venturing
volume
26
issue
4
pages
391 - 411
publisher
Elsevier
external identifiers
  • scopus:79955590389
ISSN
0883-9026
language
English
LU publication?
yes
id
3fd639b2-6e31-4f35-a6f3-b49856c2a966 (old id 3629062)
alternative location
http://www.sciencedirect.com/science/article/pii/S0883902609001207
date added to LUP
2013-04-03 09:03:39
date last changed
2017-03-05 03:15:33
@misc{3fd639b2-6e31-4f35-a6f3-b49856c2a966,
  abstract     = {We hypothesize that because fast-growing young companies must raise money in private capital markets that contain significant financing frictions, the CEOs of such firms will be compensated for successful fundraising. Using a sample of 1585 private venture-backed U.S. firms, we find that the cash pay of entrepreneur-CEOs is increasing in both the quantity and quality of financing secured and is more sensitive to successful fundraising the more challenging and difficult is the fundraising task. Successful fundraising also increases the gap between the pay of CEOs and other executives. Finally, we show that while VC financing dilutes the CEO's fractional equity ownership, it increases the dollar value of that ownership.},
  author       = {Bengtsson, Ola and Hand, John},
  issn         = {0883-9026},
  keyword      = {Finance,Venture Capital,Compensation},
  language     = {eng},
  number       = {4},
  pages        = {391--411},
  publisher    = {Elsevier},
  series       = {Journal of Business Venturing},
  title        = {CEO compensation in venture-backed firms},
  volume       = {26},
  year         = {2011},
}