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. / Series: WU International Taxation Research Paper Series
| Identifer | oai:union.ndltd.org:VIENNA/oai:epub.wu-wien.ac.at:5564 |
| Date | January 2017 |
| Creators | Petutschnig, Matthias |
| Publisher | WU Vienna University of Economics and Business, Universität Wien |
| Source Sets | Wirtschaftsuniversität Wien |
| Language | English |
| Detected Language | English |
| Type | Paper, NonPeerReviewed |
| Format | application/pdf |
| Relation | https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2972655, http://epub.wu.ac.at/5564/ |
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