Given a standard moral hazard problem, the agent's optimal compensation can be cast as a function of either (i) the gross outcome, or (ii) the net outcome, which is the gross outcome net of the agent's compensation. Contracts based on the net outcome are important in practice because (i)...

We find that employee stock option deductions lead to large aggregate tax savings for Nasdaq 100 and Samp;P 100 firms and also affect corporate marginal tax rates. For Nasdaq firms, the median marginal tax rate is 31 percent when option deductions are ignored but falls to 5 percent when one...

We find that employee stock option deductions lead to large aggregate tax savings for Nasdaq 100 and S&P 100 firms and also affect corporate marginal tax rates. For Nasdaq firms, the median marginal tax rate is 31 percent when option deductions are ignored but falls to 5 percent when one...