Abstract
We study patterns of CEO compensation in private family firms. We find that private family firms pay their CEO less than other private firms, and that the tendency of low CEO pay is stronger in family firms that have a family member as CEO. More than in other firms CEO pay in private family firms is positively associated with performance, which is contrary to some findings regarding public firms. Private family firms more than other private firms shield the CEO from business risk, in particular when the CEO is a member of the controlling family. We find that private family firms compensate their CEO for systematic risk, whereas non-family firms rather compensate for unsystematic risk.
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