The Role of Taxes in Compensation: A Case of Shareholder Expropriation
利用希腊制度中董事现金薪酬的税收差异，发现董事通过利润分配将个人税负转嫁给外部股东，从而增加净薪酬并损害股东价值，且这种税负转移随董事会持股增加而减少。
In this paper I exploit a unique feature of the Greek institutional environment, whereby alternative cash compensation payments to directors are taxed differently from the point of view of both personal and corporate taxes. Board directors can receive cash compensation either in the form of taxable salary or in the form of tax-free profit distributions. Salary payments are deductible for corporate tax purposes whereas profit distributions are not, making a unit of profit distribution more costly to shareholders than a unit of salary. Ceteris paribus, rational directors prefer profit distribution to salary given that in the former case their personal taxes are paid by shareholders. Using this setting I document that board directors increase their net compensation by shifting their personal taxes to outside shareholders, who consequently earn lower after-tax income. Moreover, I show that profit distributions reduce shareholder value. Collectively, my findings are consistent with board compensation via profit distributions indicating shareholder expropriation. I also find that the degree of tax-shifting reduces as board ownership increases. This is particularly the case for family board members. Overall, the study's results have implications for both researchers and financial reporting regulators considering compensation issues.