Abstract:
This paper is the fi rst of its kind using the variation in state corporate tax rates to investigate if they have any explanatory power in predicting variations in CEO pay. Specifi cally, this paper allows us to shed light on whether corporate tax cuts boost CEO pay? This paper, by using a difference-in-difference (DID) set up over the period 1994 to 2015, finds that corporate tax cuts statistically affect CEO pay among all publicly traded firms in the U.S. The magnitude of the effect increases among the S&P 500, S&P 100 and some tax avoiding firms. The paper further presents some interesting findings using three different measures of executive compensation.
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