Executive Compensation, Equity Risk Incentives, and Corporate Tax Aggressiveness - 27 March 2010, Social Science Research Network
http://papers.ssrn.com/sol3/
Abstract:
This study examines the association between aggressive corporate tax
avoidance and executive compensation practices. We find a positive
relation between tax aggressiveness and the level of CEO and CFO
equity-based compensation. This association is robust to controls for
firm performance and board of directors’ characteristics. Because
aggressive tax strategies involve significant uncertainty and can
provide benefits to firms over an extended period of time, we predict
that higher levels of equity risk incentives are necessary to motivate
managers to undertake risky tax strategies. Consistent with this
prediction, we find that equity risk incentives are positively
associated with corporate tax aggressiveness.
Keywords:
Tax aggressiveness, executive compensation, equity risk incentives
JEL
Classifications: M41, H25, J33, M52, G34
Working Paper Series
Date posted: February 04, 2009
; Last revised: March 27, 2010
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