CEO Compensation in Early-Stage Firms

41 Pages Posted: 7 Sep 2019

See all articles by Thi Bui

Thi Bui

University of Technology Sydney (UTS)

Andrew Ferguson

Department of Accounting, UTS

Peter Lam

University of Technology, Sydney - Discipline of Accounting; Financial Research Network (FIRN)

Date Written: September 2, 2019

Abstract

Prior studies on chief executive officer (CEO) compensation have mainly focused on large firms from a broad spectrum of industries. This study aims to provide further evidence on the determinants of CEO compensation for small, homogeneous firms. Using a sample of Australian early-stage mining exploration entities (MEEs) over the 2004−2017 period, we document a set of predictors of CEO compensation that are unique to this group of firms. First, fluctuations in commodity prices are found to be positively associated with CEO stock options value. Second, we find that signals of MEEs’ future prospects, conveyed through additions to and acquisition of capitalised exploration and evaluation expenditure, have positive impacts on CEO compensation. Third, proceeds from equity raisings indicate CEOs’ effort and skills to improve shareholder wealth, resulting in higher compensation. Lastly, we find some evidence supporting the relevance of non-executive directors’ advisory role over their monitoring role.

Keywords: CEO compensation; capital and ownership structure; corporate governance; capitalised exploration and evaluation assets; early-stage entities

JEL Classification: J33, G32, G34, M41

Suggested Citation

Bui, Thi and Ferguson, Andrew and Lam, Peter, CEO Compensation in Early-Stage Firms (September 2, 2019). Available at SSRN: https://ssrn.com/abstract=3446455 or http://dx.doi.org/10.2139/ssrn.3446455

Thi Bui

University of Technology Sydney (UTS) ( email )

15 Broadway, Ultimo
PO Box 123
Sydney, NSW 2007
Australia

Andrew Ferguson (Contact Author)

Department of Accounting, UTS ( email )

PO Box 123 Broadway
Sydney, NSW 2007
Australia
61 2 9514 3565 (Phone)

Peter Lam

University of Technology, Sydney - Discipline of Accounting ( email )

P.O. Box 123 Broadway
Sydney, NSW 2007
Australia
02 9514 3926 (Phone)
02 9514 3669 (Fax)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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