CEO compensation in venture-backed firms
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.
Year of publication: |
2011
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Authors: | Bengtsson, Ola ; Hand, John R.M. |
Published in: |
Journal of Business Venturing. - Elsevier, ISSN 0883-9026. - Vol. 26.2011, 4, p. 391-411
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Publisher: |
Elsevier |
Keywords: | CEO compensation Private venture-backed companies Rewards for successful fundraising |
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