Taxation and Regulation of Bonus Pay
We explore the consequence for taxation and regulation of bonus pay when investors are protected by taxpayers from downside risk. The paper develops a model where workers in financial sector firms make decisions about effort and risk-taking which are influenced by the structure of bonus pay. Bailouts lead to too little effort, too much risk taking and increase inequality. We show that the optimal structure of bonuses can be implemented by a combination of a regulation on the structure of bonuses and a tax on their level.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
|Date of creation:||Aug 2011|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
|Order Information:|| Email: |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Palomino, Frédéric & Prat, Andrea, 1999.
"Risk Taking and Optimal Contracts for Money Managers,"
CEPR Discussion Papers
2066, C.E.P.R. Discussion Papers.
- Palomino, Frederic & Prat, Andrea, 2003. " Risk Taking and Optimal Contracts for Money Managers," RAND Journal of Economics, The RAND Corporation, vol. 34(1), pages 113-37, Spring.
- Palomino, F.A. & Prat, A., 1998. "Risk Taking and Optimal Contracts for Money Managers," Discussion Paper 1998-108, Tilburg University, Center for Economic Research.
- John Thanassoulis, 2011. "Bankers' Pay Structure And Risk," Economics Series Working Papers 545, University of Oxford, Department of Economics.
- Bruno Biais & Catherine Casamatta, 1999. "Optimal Leverage and Aggregate Investment," Journal of Finance, American Finance Association, vol. 54(4), pages 1291-1323, 08.
- Doina Maria Radulescu, 2010.
"The Effects of a Bonus Tax on Manager Compensation and Welfare,"
CESifo Working Paper Series
3030, CESifo Group Munich.
- Doina Radulescu, 2012. "The Effects of a Bonus Tax on Manager Compensation and Welfare," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 68(1), pages 1-16, March.
- Hendrik Hakenes & Isabel Schnabel, 2014.
"Bank Bonuses and Bailouts,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 46(s1), pages 259-288, 02.
- Hendrik Hakenes & Isabel Schnabel, 2013. "Bank Bonuses and Bail-Outs," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2013_03, Max Planck Institute for Research on Collective Goods.
- Hakenes, Hendrik & Schnabel, Isabel, 2012. "Bank Bonuses and Bail-outs," CEPR Discussion Papers 8852, C.E.P.R. Discussion Papers.
- Hirshleifer, David & Thakor, Anjan V, 1992. "Managerial Conservatism, Project Choice, and Debt," Review of Financial Studies, Society for Financial Studies, vol. 5(3), pages 437-70.
- John Thanassoulis, 2011. "The Case For Intervening In Bankers' Pay," Economics Series Working Papers 532, University of Oxford, Department of Economics.
- Kose John & Anthony Saunders & Lemma W. Senbet, 1998.
"A Theory of Bank Regulation and Management Compensation,"
New York University, Leonard N. Stern School Finance Department Working Paper Seires
98-043, New York University, Leonard N. Stern School of Business-.
- John, Kose & Saunders, Anthony & Senbet, Lemma W, 2000. "A Theory of Bank Regulation and Management Compensation," Review of Financial Studies, Society for Financial Studies, vol. 13(1), pages 95-125.
- Kose John & Anthony Saunders & Lemma W. Senbet, 1996. "A Theory of Bank Regulation and Management Compensation," New York University, Leonard N. Stern School Finance Department Working Paper Seires 96-30, New York University, Leonard N. Stern School of Business-.
- Coate, Stephen, 1995. "Altruism, the Samaritan's Dilemma, and Government Transfer Policy," American Economic Review, American Economic Association, vol. 85(1), pages 46-57, March.
- Patrick Bolton & Hamid Mehran & Joel Shapiro, 2010. "Executive compensation and risk taking," Staff Reports 456, Federal Reserve Bank of New York.
- repec:dgr:kubcen:1998108 is not listed on IDEAS
- Brian Bell, 2010. "Bankers' bonuses," LSE Research Online Documents on Economics 57934, London School of Economics and Political Science, LSE Library.
- Ghatak, Maitreesh & Pandey, Priyanka, 2000. "Contract choice in agriculture with joint moral hazard in effort and risk," Journal of Development Economics, Elsevier, vol. 63(2), pages 303-326, December.
When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:8532. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.