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The purpose of this paper is to empirically explain the relationship between the remuneration levels of a sample of listed small and medium enterprise (SME) directors and firm performance. The paper also investigates whether deviations from the optimal directors’ remuneration level reduces firm performance.

The study uses a panel data regression analysis of 802 AIM-listed SMEs over an eight-year period (2005-2012).

Using a non-linear approach, the results show that an optimum director’s remuneration level is calculated by comparing the benefits and costs of director’s remuneration. Hence, the paper not only shows how directors’ remuneration level affects firm performance but it also extends the stream of knowledge by indicating how a deviation from the optimal point influences UK-listed SME performances. Moreover, the results show that the effect of directors’ remuneration on firm performance is greater during a financial crisis period.

Compared with previous literature on directors’ remuneration, this paper focuses on AIM-listed SMEs, and the author’s finding of a concave relationship between directors’ remuneration level and performance of leads them to recommend that firms, especially SMEs, should endeavour to determine the optimal level of directors’ remuneration to maximise performance.

This paper aims to report the results of an investigation into the effect of corporate governance factors on the performance of listed small and medium-sized enterprises (SMEs), and examines whether this effect differs between the two sizes of business.

The paper uses unbalanced panel data regression analysis on a sample of 234 SMEs listed on the Alternative Investment Market, for a 10-year period (2004-2013).

The panel data analysis results show that for all SMEs, corporate governance factors – board size, chief executive officer (CEO) age and tenure and directors’ remuneration – are significantly associated with performance of SMEs. The results also suggest that while board size is associated with the performance of both small and medium enterprises, CEO age is significant only for medium firms and directors’ remuneration only for small ones, while CEO tenure and proportion of non-executive directors are not significant for either.

Overall, the results imply that corporate governance factors affect the performance of listed SMEs. However, this effect differs significantly between small and medium enterprises. The findings have important implications for policymakers who prescribe corporate governance mechanisms for SMEs.

The paper adds to existing literature on corporate governance of SMEs by establishing a relationship between firm performance and board size, CEO age, CEO tenure, directors’ remuneration and proportion of non-executive directors.

This paper aims to examine the influence of cash flow on the relationship between net working capital and firm performance.

The paper uses unbalanced panel data regression analysis on a sample of 6,926 non-financial small and medium enterprises in the UK for the period from 2004 to 2013.

The results indicate a strong concave relationship between net working capital and performance in the absence of cash flow; however, the relationship becomes convex after taking cash flow into consideration. The results further show that firms with cash flow below the sample median exhibit lower investment in working capital, but firms with cash flow above the sample median have higher investment in working capital. The results suggest that managers should consider their firms cash flow when determining the appropriate investment to be made in working capital, so as to improve performance.

Overall, the results suggest that whilst firms with limited cash flow should strive to reduce investment in working capital, firms with available cash flow should increase investment in working capital to improve performance.

This current study incorporates the relevance of cash flow in assessing the association between working capital management and firm performance.