THE REMUNERATION OF NON-OWNER MANAGERS IN UK UNQUOTED AND UNLISTED SECURITIES MARKET ENTERPRISES - AN EMPIRICAL-ANALYSIS OF FIRM SPECIFIC, HUMAN-CAPITAL AND JOB HISTORY INFLUENCES

This paper examines the extent to which the remuneration levels of non-owner managers employed by UK small and medium size enterprises (SME) can be explained empirically by a number of firm specific, human capital and job history characteristics. The UK SME sector is very heterogeneous and we test for possible differences in the determinants of remuneration for two distinct groups of firms. One group consists of high-growth firms that achieved an Unlisted Securities Market (USM) listing within 10 years of start-up. The second group consists of similar firms, matched with the USM firms in terms of age, sector and location, that have remained unquoted businesses. The empirical analysis, based upon data obtained from interviews with non-owner managers and the published financial records of their employing firms lodged at Companies House, focuses on comparing the separately estimated remuneration equations for the two groups of managers. The empirical results indicate that for both groups, the managers' age and qualifications and the asset size and location of their employing firms are significant factors and collectively are able to explain a large proportion of the cross-sectional variance in remuneration. Moreover, the size and significance levels of the estimated parameters on these variables were statistically identical in the two equations. However, the job history variables, in particular whether or not the manager had previously been employed by a large firm and whether the individual had previously been employed as a manager, were of relatively more importance in explaining the remuneration levels of the USM managers. Though there is a lack of previous empirical research on SME managerial pay, these results are broadly consistent with the expectations derived from the extant theoretical and empirical literatures