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The effect of taxes on CEO performance

Author

Listed:
  • Arnemann, Laura
  • Buhlmann, Florian
  • Ruf, Martin
  • Voget, Johannes

Abstract

In this paper, we investigate the effect of higher personal income taxes on CEO and firm performance in publicly traded US firms. In response to higher taxes on compensation, CEOs are less likely to reach performance goals and spend more time working in boards outside of their firm. At the same time, firm performance drops before eventually recovering as investment projects with below average profitability are disregarded and due to adjustments in CEO compensation.

Suggested Citation

  • Arnemann, Laura & Buhlmann, Florian & Ruf, Martin & Voget, Johannes, 2025. "The effect of taxes on CEO performance," ZEW Discussion Papers 25-013, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:313010
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    File URL: https://www.econstor.eu/bitstream/10419/313010/1/1919180664.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Executive Compensation; Personal Income Taxation; Firm Performance;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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