The Response of Deferred Executive Compensation to Changes in Tax Rates
Given the increasing use of stock options in executive compensation, we examine how taxes influence the choice of compensation and document that income deferral is an important margin of adjustment in response to tax rate changes. To account for this option in the empirical analysis, we explore deferral by estimating how executives’ choice of compensation between current and deferred income depends on changes in tax policy. Our empirical results suggest a significant impact of taxes on the composition of executive compensation.
The authors would like to thank Frank Caliendo, Jared DeLisle Martin Feldstein, Shannon Mok, Roger Gordon (the editor), Jason Smith, and participants of the 2014 Trans-Atlantic Public Economics Seminar for their helpful comments. We also thank Matthew Jensen and Anthony Paranzino for excellent research assistance. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Aspen Gorry & Kevin A. Hassett & R. Glenn Hubbard & Aparna Mathur, 2015. "The response of deferred executive compensation to changes in tax rates," Journal of Public Economics, vol (). citation courtesy of
The Response of Deferred Executive Compensation to Changes in Tax Rates, Aspen Gorry, Kevin A. Hassett, R. Glenn Hubbard, Aparna Mathur. in Personal Income Taxation and Household Behavior (TAPES), Gordon and Keuschnigg. 2016