TY - UNPB
T1 - Regulatory Compensation Limits and Business
Performance - Evidence from the National
Football League
AU - Petutschnig, Matthias
PY - 2017
Y1 - 2017
N2 - Executives' compensation has been on the forefront of the public and political debate since the recent financial crisis. One of the measures publicly discussed is a general upper boundary to top management compensation packages ("salary cap", "maximum wage"). While such measures are novelties to the corporate world, the North American major sports leagues have been using maximum compensation regulations for decades. This paper exploits the 23-year experience with salary cap regulations from the National Football League (NFL). The results show a significant negative relation between the success of NFL teams and the amount of the net (after-tax) salary cap represented by the personal income tax rate of the teams' home states. A team from California (highest average tax rate) wins 2.256 games less per year and has an 11% reduced probability of making the playoffs than a team located in a no-tax state such as Florida or Texas. The paper contributes to and informs the ongoing public and political debate regarding the regulation of executive compensation, and its effects on the performance of the regulated entities.
AB - Executives' compensation has been on the forefront of the public and political debate since the recent financial crisis. One of the measures publicly discussed is a general upper boundary to top management compensation packages ("salary cap", "maximum wage"). While such measures are novelties to the corporate world, the North American major sports leagues have been using maximum compensation regulations for decades. This paper exploits the 23-year experience with salary cap regulations from the National Football League (NFL). The results show a significant negative relation between the success of NFL teams and the amount of the net (after-tax) salary cap represented by the personal income tax rate of the teams' home states. A team from California (highest average tax rate) wins 2.256 games less per year and has an 11% reduced probability of making the playoffs than a team located in a no-tax state such as Florida or Texas. The paper contributes to and informs the ongoing public and political debate regarding the regulation of executive compensation, and its effects on the performance of the regulated entities.
UR - https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2972655
U2 - 10.2139/ssrn.2972655
DO - 10.2139/ssrn.2972655
M3 - WU Working Paper
T3 - WU International Taxation Research Paper Series
BT - Regulatory Compensation Limits and Business
Performance - Evidence from the National
Football League
PB - WU Vienna University of Economics and Business
CY - Vienna
ER -