Board size, director compensation, and firm transition across stock exchanges: evidence from Canada

In this study, we examine the relationship between the role and compensation structure of non-executive directors when firms on the TSX Venture Exchange (TSX-V) move to the Toronto Stock Exchange (TSX-C) in Canada. Using data from 156 listed firms, we find that graduating TSX-V firms employ relatively larger number of nonexecutive directors and pay them a higher proportion of contingent compensation than do the TSX-C firms. The graduated firms also provide non-executive outside directors with more components of compensation package. However, we find no support for the hypothesis that a TSX-V firm would pay a higher average director compensation in order to graduate. We also find that increases in the total amount and the components of compensation package are consistent with the shift in emphasis from resource dependence to monitoring in the same firm following its graduation from TSX-V to TSXC. The study’s implications are given.