Does location influence executive compensation? Evidence from Canadian SMEs

Harjeet S. Bhabra () and Ashrafee T. Hossain ()
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Harjeet S. Bhabra: Concordia University
Ashrafee T. Hossain: Memorial University of Newfoundland

Journal of Management & Governance, 2018, vol. 22, issue 1, No 5, 89-109

Abstract: Abstract We examine the impact of geographic location on the level and structure of executive compensation of small and medium enterprises (SMEs) in Canada, using a panel data sample between 2008 and 2011. Our results show that SMEs pay a higher price for talent by paying a large proportion (71%) of compensation as guaranteed cash pay to their executives. We also report a strong influence of location on compensation structure. Specifically, rural firms pay 13% more incentive based equity pay to their executives compared to their size matched urban counterparts. However, there is no difference between the total compensation for managers of rural and urban firms after controlling for the cost of living index. In cross-sectional tests, we observe that total compensation is positively related to CEO/Chair duality and family ownership but is not related to management quality. In addition, we find that rural firms display a higher pay-performance sensitivity.

Keywords: Executive compensation; Location; SMEs; Canadian firms (search for similar items in EconPapers)
JEL-codes: G30 G34 M52 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s10997-017-9377-5

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