search query: @indexterm taxation / total: 1872
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| Author: | Harris, D. G. Livingstone, J. R. |
| Title: | Federal Tax Legislation as an Implicit Contracting Cost Benchmark: The Definition of Excessive Executive Compensation |
| Journal: | Accounting Review
2002 : OCT, VOL. 77:4, p. 997-1018 |
| Index terms: | TAXATION COMPENSATION COSTS EXECUTIVES |
| Language: | eng |
| Abstract: | The authors examine how tax legislation that restricted firms' deductions of CEO compensation above $1 million reduced the implicit contracting cost of compensation for firms that were expected to pay below that amount and that were not directly affected by the law change. The authors find that firms that expected to pay their CEOs less than $1 million actually increased their CEOs' cash compensation, contrary to Congress's expectations. Moreover, the magnitude of the unexpected increase in compensation is proportional to how far the CEO's expected compensation fell below Congress's new $1 million reasonable-compensation standard. Thus, the authors' study provides evidence that some of the largest U.S. corporations responded in a manner contrary to policymakers' expectations. |
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