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The Response of Deferred Executive Compensation to Changes in Tax Rates

Listed author(s):
  • Aspen Gorry
  • Kevin A. Hassett
  • R. Glenn Hubbard
  • Aparna Mathur

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.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 21516.

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Date of creation: Sep 2015
Publication status: published as 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 ().
Handle: RePEc:nbr:nberwo:21516
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