Corporate Tax Breaks and Executive Compensation

• 成果类型: Article
• 署名作者: Ohrn, Eric
• 署名单位: Grinnell College
• 刊物名称: AMERICAN ECONOMIC JOURNAL-ECONOMIC POLICY
• ISSN/ISSBN: 1945-7731
• DOI: 10.1257/pol.20210155
• 发表日期: 2023
• 页码: 215-255
• 关键词: ceo pay; income tax; INVESTMENT; incentives; MARKET; OWNERSHIP; BEHAVIOR; taxation; DESIGN; POLICY

摘要

I analyze the effect of two corporate tax breaks, bonus depreciation and the Domestic Production Activities Deduction (DPAD), on executive compensation in publicly traded US firms. I find both tax breaks significantly increase executive compensation. For every dollar a firm benefits from the tax breaks, compensation of the firm's top five highest-paid executives increases by $0.17 to $0.25. The tax breaks increase compensation primarily in firms with weaker governance structures, suggesting the compensation response is driven by executive rent extraction. (JEL D22, G34, H25, M12, M52)