IDEAS home Printed from https://ideas.repec.org/a/eee/advacc/v70y2026ics0882611026000076.html

Chief executive officer compensation and tax risk

Author

Listed:
  • Jaiswall, Sudhir S.
  • Shroff, Arpita A.

Abstract

This paper investigates whether and how tax risk is reflected in the variable portion of CEO compensation. We conduct non-directional tests of the association between predictable (ex-post) and unpredictable (ex-ante) measures of tax risk and incentive-based pay over the period 1992 to 2022. The empirical design incorporates controls for tax avoidance, firm performance, risk, size, growth, and tenure, and includes CEO, firm, industry, and year fixed effects. Our results show that, on average, higher tax risk is associated with higher variable CEO compensation, and that this association is significantly stronger for firms with high average cash effective tax rates. Boards appear to compensate CEOs for tax risk primarily through stock-based and other non-bonus components of variable pay, rather than through bonuses or option grants. Cross-sectional analyses further suggest that the role of tax risk on variable compensation is more pronounced in multinational firms, in firms subject to greater tax authority scrutiny, and in firms characterized by higher leverage and lower research and development intensity.

Suggested Citation

  • Jaiswall, Sudhir S. & Shroff, Arpita A., 2026. "Chief executive officer compensation and tax risk," Advances in accounting, Elsevier, vol. 70(C).
    • Handle: RePEc:eee:advacc:v:70:y:2026:i:c:s0882611026000076
    DOI: 10.1016/j.adiac.2026.100872
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0882611026000076
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.adiac.2026.100872?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:advacc:v:70:y:2026:i:c:s0882611026000076. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/advances-in-accounting/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.