Why Taxing Executives' Bonuses Can Foster Risk-Taking Behavior - 10.1628/093245616X14689190842778 - Mohr Siebeck
Wirtschaftswissenschaft

Martin Grossmann, Markus Lang, Helmut Dietl

Why Taxing Executives' Bonuses Can Foster Risk-Taking Behavior

Jahrgang 172 () / Heft 4, S. 645-664 (20)

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Bonus taxes have been implemented to prevent managers from taking excessive risks. This paper analyzes the effects of taxing executives' bonuses in a principal- agent model. Our model shows that, contrary to its intention, the introduction of a bonus tax intensifies managers' risk-taking behavior and decreases their effort. The principal responds to a bonus tax by offering the manager a higher fixed salary but a lower incentive-based component (bonus rate).
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Martin Grossmann Keine aktuellen Daten verfügbar.

Markus Lang Keine aktuellen Daten verfügbar.

Helmut Dietl Keine aktuellen Daten verfügbar.