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| Author(s): |
Cláudio Soerger Zaro
Total Authors: 1
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| Document type: | Doctoral Thesis |
| Press: | São Paulo. |
| Institution: | Universidade de São Paulo (USP). Faculdade de Economia, Administração e Contabilidade (FEA/SBD) |
| Defense date: | 2015-02-23 |
| Examining board members: |
Andson Braga de Aguiar;
Lucas Ayres Barreira de Campos Barros;
Elizabeth Krauter;
Sílvio Hiroshi Nakao
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| Advisor: | Andson Braga de Aguiar |
| Abstract | |
This study seeks to evidence the influence of tax considerations on incentives in compensation systems, as well as establish whether tax and incentive effects differ across the organization\'s structure. Agency theory literature suggests that a greater emphasis on incentive purposes leads to a higher proportion of annual bonuses in compensation packages. Tax legislation, on the other hand, presents the expectation that a prioritization of tax purposes will be reflected in a greater proportion of profit and gain sharing when determining compensation packages. These differing orders are congruent with the perspective based in trade-off theory, which posits that a greater emphasis on one factor creates an opposite effect on another, and in light of this, companies seek to set a balance between various items under consideration. Beside this, an emphasis on incentive-based goals is expected in executive compensation when tax considerations take precedence over that of middle management, as a result of increased supervision and the lesser need for stock options at lower levels of the organization\'s structure. In order to analyze these relationships, empirical data were gathered using a questionnaire submitted to the companies that both reported balance sheets in 2012 and participated in the Biggest and Best (Melhores e Maiores) ranking published by Exame magazine in 2013, following which data were also gathered from the companies\' reference forms for a secondary empirical analysis, as provided by the CVM (Comissão de Valores Mobiliários). The main expectation of this study is that tax effects are significant in the determination of how compensation is structured, particularly in respect to the decision to use Profit and Gain Sharing. The results support this claim. Regarding the importance of incentives, it was shown that all of the types of compensation in question are used pursuing this aim; however, profit and gain sharing displayed a significantly lesser effect than the others. Concerning tax effects, the hypothesis is confirmed, suggesting more intense use of Profit and Gain Sharing. Further, and in relation to Profit and Gain Sharing specifically, a significant interaction between incentive and tax considerations was shown, suggesting the existence of a trade-off inherent to the selection of the same, or rather, when tax considerations take priority, incentives purposes are sacrificed in the case of Profit and Gain Sharing. No significant results were established regarding differences across the organization structure. (AU) | |
| FAPESP's process: | 13/19182-1 - Tax effects on the design of managerial compensation systems |
| Grantee: | Cláudio Soerger Zaro |
| Support Opportunities: | Scholarships in Brazil - Doctorate (Direct) |