A Literature Review on the Dual Effect of Corporate Tax Planning and Managerial Power on Executive Compensation Structure †

This paper examines the amount and structure of the pay package for the departing CEO in a company around CEO succession. I find that the characteristics of the departing CEO compensation can provide valuable information regarding the incoming changes in corporate governance around the succession. Specifically, when a departing CEO is entrenched with a “better” compensation package characterized with a greater amount of pay in cash and in total at a lower risk, the CEO, after his retirement, is more likely to remain on the board as a director or become the chairman of the board, persuade the board to pick an insider rather than an outsider to be his successor, and to promote the company’s current president and/or chief operating officer to be the incoming CEO. These findings are consistent with the management entrenchment theory that when a CEO is entrenched with a greater discretionary power and better personal benefits, he is more likely to use his managerial power to continue his influence on the company even after he retires from the CEO position.

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CEO Compensation and Acquired and Acquiring Companies in Large Corporate Acquisitions

GIS Business ◽

10.26643/gis.v11i5.3423 ◽

2016 ◽

Vol 11 (5) ◽

pp. 01-13

Author(s):

Simon Yang

Keyword(s):

Firm Performance ◽

Executive Compensation ◽

Ceo Compensation ◽

Relative Sensitivity ◽

Matched Sample ◽

Executive Pay ◽

Corporate Acquisitions ◽

Acquiring Firms ◽

Managerial Power ◽

To Receive

This paper examines the relative sensitivity of CEO compensation of both acquiring and acquired firms in the top 30 U.S. largest corporate acquisitions in each year for the period of 2003 to 2012. We find that total compensation and bonus granted to executive compensation for acquired companies, not acquiring companies, are significantly related to the amount of acquisition deal even after the size and firm performance are controlled for. Both acquiring and acquired CEOs are found to make the significantly higher compensation than the matched sample firms in the same industry and calendar year. We also find that executives with higher managerial power, as measured by a lower salary-based compensation mix, prior to a corporate acquisition are more likely to receive a higher executive pay in the year of acquisition. The association between executive compensation and managerial power seems to be stronger for acquired firms than for acquiring firms in corporate acquisition. Overall, our findings suggest that corporate acquisition has higher impacts on executive compensation for acquired firm CEOs than for acquiring firm CEOs.

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Executive Compensation Structure and Credit Spreads

SSRN Electronic Journal ◽

10.2139/ssrn.2336039 ◽

2013 ◽

Author(s):

Stefano Colonnello ◽

Giuliano Curatola ◽

Giang Hoong

Keyword(s):

Executive Compensation ◽

Credit Spreads ◽

Compensation Structure

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The Shareholder Response to Corporate Tax Planning Advice Regulation

SSRN Electronic Journal ◽

10.2139/ssrn.3540996 ◽

2020 ◽

Cited By ~ 1

Author(s):

Michael P. Donohoe ◽

Brian Gale ◽

Michael Mayberry

Keyword(s):

Tax Planning ◽

Corporate Tax

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Brewing Up Controversy: A Case Exploring the Ethics of Corporate Tax Planning

Issues in Accounting Education ◽

10.2308/iace-51178 ◽

2015 ◽

Vol 30 (4) ◽

pp. 311-327 ◽

Cited By ~ 8

Author(s):

Megan F. Hess ◽

Raquel Meyer Alexander

Keyword(s):

Real World ◽

Ethical Issues ◽

Tax Avoidance ◽

Tax Planning ◽

Learning Assessment ◽

Class Discussion ◽

Corporate Tax ◽

Tax Havens ◽

Multinational Organizations ◽

The U.S

ABSTRACT This instructional case explores the ethical issues surrounding the corporate tax-planning and tax-avoidance strategies of multinational organizations. Drawing on the real-world experiences of SABMiller, one of the world's largest beverage companies, this case provides a launching point for students to consider the ethics of corporate tax planning. The ethics of multinational tax practices, especially the use of tax havens, has recently become the focus of media and legislative debate in both the U.S. and the U.K., and many well-respected companies, such as General Electric, Apple Inc., and Starbucks are now feeling the pressure to reform. In a post-case learning assessment, students demonstrated significant improvement in their understanding and indicated that they enjoyed discussing this controversial issue. The “Implementation Guidance” section and Teaching Notes offer guidance for in-class discussion of the ethical and tax issues in this case.

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Optimal Executive Compensation versus Managerial Power: A Review of Lucian Bebchuk and Jesse Fried's Pay without Performance: The Unfulfilled Promise of Executive Compensation

Journal of Economic Literature ◽

10.1257/jel.45.2.419 ◽

2007 ◽

Vol 45 (2) ◽

pp. 419-428 ◽

Cited By ~ 41

Author(s):

Michael S Weisbach

Keyword(s):

Executive Compensation ◽

Effective Potential ◽

Risk Taking ◽

Corporate Performance ◽

Policy Changes ◽

Standard View ◽

Compensation Systems ◽

Managerial Power ◽

Positive Perspective ◽

Normative Perspective

This essay reviews Lucian A. Bebchuk and Jesse M. Fried's Pay without Performance: The Unfulfilled Promise of Executive Compensation. Bebchuk and Fried criticize the standard view of executive compensation, in which executives negotiate contracts with shareholders that provide incentives that motivate them to maximize the shareholders' welfare. In contrast, Bebchuk and Fried argue that executive compensation is more consistent with executives who control their own boards and who maximize their own compensation subject to an “outrage constraint.” They provide a host of evidence consistent with this alternative viewpoint. The book can be evaluated from both positive and normative perspectives. From a positive perspective, much of the evidence they present, especially about the camouflage and risk-taking aspects of executive compensation systems, is fairly persuasive. However, from a normative perspective, the book conveys the idea that policy changes can dramatically improve executive compensation systems and consequently overall corporate performance. It is unclear to me how effective potential reforms designed to achieve such changes are likely to be in practice.

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Research on the Role of Tax Planning in Preventing Corporate Tax Risks

Modern Management Forum ◽

10.18686/mmf.v4i4.2784 ◽

2020 ◽

Vol 4 (4) ◽

pp. 156

Author(s):

Yuting Guo ◽

Qiuping Ouyang ◽

Min Peng

Keyword(s):

Business Process ◽

Tax Planning ◽

Business Development ◽

Tax Burden ◽

Corporate Tax ◽

Laws And Regulations

<p>Paying taxes according to laws and regulations in the process of business development is an obligation of companies. It is a vital task for companies to reduce tax burden by reasonably applying laws, regulations and policies, which requires tax planning. This article explores the relevant contents of corporate tax planning and tax risks. Firstly, it briefly expounds tax risks and tax planning, then analyzes the causes of tax risks. Finally, the measures are put forward to avoid tax risks in the business process affecting the development of companies.</p>

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Corporate governance issues surrounding executive compensation and executive severance

10.32920/ryerson.14653953 ◽

2021 ◽

Author(s):

Andrea W. Zanetti

Keyword(s):

Executive Compensation ◽

Board Independence ◽

Substantial Influence ◽

Publicly Traded ◽

Business Corporation ◽

Effective Governance ◽

Corporation Law ◽

Managerial Power ◽

Legislative Framework

This paper seeks to explain why and how executive severances of publicly-traded Canadian and U.S. companies have reached the financial levels they have, generating public and shareholder outrage and causing governments on both sides of the border to introduce new legislation. The paper investigates the role of the CEO, boards and shareholders in the setting of executive compensation. As the origins ofthe three roles lie in business corporation law, the legislative framework of Canadian and U.S. companies is presented to permit the reader to understand the legal accountabilities and rights of each of the three parties. The paper identifies that executives may exercise substantial influence over boards, possibly impeding effective governance. The paper concludes that effective governance, including greater board independence and board competence in executive compensation matters will help to improve board functioning and minimize the effects of the agency problem, cronyism and managerial power.

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