Human Capital And Agency Effects On CEO Compensation Of IPO Biopharmaceutical Firms And The Market's Response

ASU Author/Contributor (non-ASU co-authors, if there are any, appear on document)
David Williams, Professor of Healthcare Management (Creator)
Appalachian State University (ASU )
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Abstract: This paper examines the determinants of base pay and total incentive compensation packages of CEOs of biopharmaceutical firms that have recently gone public, and whether human capital and agency factors affect the market’s response to the initial public offering. We find that in terms of net proceeds, the IPO market appears to reward the firms that have founder-CEOs and CEOs with higher incentive compensation. CEOs with prior venture capital experience are associated with receiving higher incentive compensation, while CEOs with a greater ownership interest in the firm receive lower incentive compensation but higher salaries. CEOs of firms with a greater percentage of insiders are associated with lower salaries. The results should add to our understanding related to human capital and agency theories, as well as help firms and investors better understand and structure CEO compensation.

Additional Information

Williams, D.R., Coffey, B.S. & Young, C.C. Human capital and agency effects on CEO compensation of IPO biopharmaceutical firms and the market’s response. J Manag Gov 22, 315–337 (2018). Publisher version of record available at:
Language: English
Date: 2017
CEO compensation, Initial public offering, Agency issues, Human capital, effects

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