1I would like to thank the members of my dissertation committee, namely Joel Slemrod
Michigan and the University of Iceland for comments on an earlier draft of this paper. This paper analyzes the effect of personal income taxation on the sensitivity of executive compensation to company performance and the use of stock option and restricted stock grants underlying this sensitivity. T...
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ftciteseerx:oai:CiteSeerX.psu:10.1.1.598.5012 2023-05-15T16:50:25+02:00 1I would like to thank the members of my dissertation committee, namely Joel Slemrod Jim Hines John Laitner Yan Chen Charlie Brown Clemens Sialm Dan Silverman The Pennsylvania State University CiteSeerX Archives 2003 application/pdf http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.598.5012 en eng http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.598.5012 Metadata may be used without restrictions as long as the oai identifier remains attached to it. https://www.cerge-ei.cz/pdf/events/papers/040129_t.pdf text 2003 ftciteseerx 2016-01-08T13:50:47Z Michigan and the University of Iceland for comments on an earlier draft of this paper. This paper analyzes the effect of personal income taxation on the sensitivity of executive compensation to company performance and the use of stock option and restricted stock grants underlying this sensitivity. The theoretical model predicts that, if a single tax rate applies to the entire compensation package, an increase in the tax rate weakly diminishes the equilibrium level of managerial effort and the after-tax pay-to-performance sensitivity, with the effect on the pre-tax pay-to-performance sensitivity being ambiguous. When salary and option gains are taxed at a higher rate than stock gains, tax changes also induce shifting among the individual compensation instruments. Interestingly, this differential taxation leads to a positive amount of stocks in the compensation contract even in the absence of any desire to incentivize the manager. In addition, an increase in the tax rate applied to salary and option gains may increase the level of managerial effort in equilibrium. On the other hand, an increase in the tax rate applied to stock gains weakly decreases the Text Iceland Unknown |
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Michigan and the University of Iceland for comments on an earlier draft of this paper. This paper analyzes the effect of personal income taxation on the sensitivity of executive compensation to company performance and the use of stock option and restricted stock grants underlying this sensitivity. The theoretical model predicts that, if a single tax rate applies to the entire compensation package, an increase in the tax rate weakly diminishes the equilibrium level of managerial effort and the after-tax pay-to-performance sensitivity, with the effect on the pre-tax pay-to-performance sensitivity being ambiguous. When salary and option gains are taxed at a higher rate than stock gains, tax changes also induce shifting among the individual compensation instruments. Interestingly, this differential taxation leads to a positive amount of stocks in the compensation contract even in the absence of any desire to incentivize the manager. In addition, an increase in the tax rate applied to salary and option gains may increase the level of managerial effort in equilibrium. On the other hand, an increase in the tax rate applied to stock gains weakly decreases the |
author2 |
The Pennsylvania State University CiteSeerX Archives |
format |
Text |
author |
Jim Hines John Laitner Yan Chen Charlie Brown Clemens Sialm Dan Silverman |
spellingShingle |
Jim Hines John Laitner Yan Chen Charlie Brown Clemens Sialm Dan Silverman 1I would like to thank the members of my dissertation committee, namely Joel Slemrod |
author_facet |
Jim Hines John Laitner Yan Chen Charlie Brown Clemens Sialm Dan Silverman |
author_sort |
Jim Hines |
title |
1I would like to thank the members of my dissertation committee, namely Joel Slemrod |
title_short |
1I would like to thank the members of my dissertation committee, namely Joel Slemrod |
title_full |
1I would like to thank the members of my dissertation committee, namely Joel Slemrod |
title_fullStr |
1I would like to thank the members of my dissertation committee, namely Joel Slemrod |
title_full_unstemmed |
1I would like to thank the members of my dissertation committee, namely Joel Slemrod |
title_sort |
1i would like to thank the members of my dissertation committee, namely joel slemrod |
publishDate |
2003 |
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http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.598.5012 |
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Iceland |
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Iceland |
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https://www.cerge-ei.cz/pdf/events/papers/040129_t.pdf |
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http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.598.5012 |
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Metadata may be used without restrictions as long as the oai identifier remains attached to it. |
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