No evidence that the cap on deductibility has affected CEO compensation: Various specifications (using Compustat's TDC1)
| (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | |
| VARIABLES | ||||||||
| Post-2012 health insurance company | -1246 | -234.9 | 556.8 | 938.2 | 1388 | 1443 | 1423 | 1243 |
| (1142) | (1004) | (741.6) | (667.3) | (1057) | (989.8) | (1014) | (1075) | |
| Net income | 0.0886 | -4.082*** | -4.789** | -1.071 | ||||
| (0.0668) | (0.372) | (1.964) | (3.012) | |||||
| Sales | 0.000335 | -0.815*** | -0.808*** | -0.810 | ||||
| (0.00850) | (0.0694) | (0.0672) | (0.947) | |||||
| Market value | 0.0255** | 0.0636*** | 0.0693*** | 0.104 | ||||
| (0.0108) | (0.0125) | (0.0205) | (0.0851) | |||||
| Difference in net income | -0.0860* | -0.0883** | -0.0818* | -0.0720 | ||||
| (0.0467) | (0.0447) | (0.0446) | (0.0443) | |||||
| Difference in sales | 0.0357** | 0.0385** | 0.0366** | 0.0291* | ||||
| (0.016) | (0.0157) | (0.0158) | (0.0155) | |||||
| Difference in market value | -0.00122 | -0.000602 | -0.00117 | 0.00466 | ||||
| (0.00993) | (0.0107) | (0.0108) | (0.0109) | |||||
| Health insurance dummy | 3318** | |||||||
| (1681) | ||||||||
| Net income (t=-1) | 0.0664 | -22.14*** | ||||||
| (0.0582) | (0.608) | |||||||
| Sales (t=-1) | -0.00512 | 0.0202 | ||||||
| (0.00888) | (0.0820) | |||||||
| Market value (t=-1) | 0.0184* | -0.00279 | ||||||
| (0.00960) | (0.00535) | |||||||
| Difference in net income (t=-1) | -0.0358 | -0.0152 | ||||||
| (0.0257) | (0.0298) | |||||||
| Difference in sales (t=-1) | 0.0329* | 0.0381* | ||||||
| (0.0181) | (0.0203) | |||||||
| Difference in market value (t=-1) | 0.0207* | 0.0236** | ||||||
| (0.0106) | (0.0103) | |||||||
| Sales (t=-2) | -0.000981 | |||||||
| (0.00989) | ||||||||
| Market value (t=-2) | 0.00656 | |||||||
| (0.0103) | ||||||||
| Difference in net income (t=-2) | -0.0110 | |||||||
| (0.0246) | ||||||||
| Difference in sales (t=-2) | 0.000513 | |||||||
| (0.0120) | ||||||||
| Difference in market value (t=-2) | 0.0229** | |||||||
| (0.0100) | ||||||||
| Retirement year dummy | -118.4 | -610.9 | ||||||
| (315.1) | (406.1) | |||||||
| Retirement year dummy (t=-1) | -1288*** | -1405*** | ||||||
| (411.6) | (414.4) | |||||||
| Constant | 9829*** | 7413*** | 7498*** | 7655*** | 17975*** | 25113*** | 18374*** | 14549 |
| (850.9) | (119.0) | (111.0) | (110.6) | (768.2) | (365.4) | (1421) | (10887) | |
| Observations | 4183 | 3408 | 2965 | 2597 | 3408 | 2965 | 3408 | 3408 |
| Number of firms | 555 | 411 | 381 | 349 | 411 | 381 | 411 | 411 |
| R-squared, within | 0.0232 | 0.0225 | 0.0202 | 0.00642 | 0.164 | 0.145 | 0.167 | 0.175 |
| R-squared, between | 0.00208 | 0.366 | 0.324 | 0.297 | 0.448 | 0.371 | 0.448 | 0.450 |
| R-squared, overall | 0.00681 | 0.228 | 0.228 | 0.228 | 0.342 | 0.338 | 0.344 | 0.350 |
Notes: * p<.05; ** p<.01; *** p<.001. Model 1 provides a baseline for comparison and only includes dummy variables to designate the treatment group, all health insurers, and years. Model 2 does not include interactions or lags. Model 3 does not include interactions, and all variables are lagged by one year. Model 4 does not include interactions, and all variables are lagged by two years. Model 5 includes industry-specific interactions, but no lags. Model 6 includes industry-specific interactions, and all variables are lagged by one year. Model 7 includes industry-specific interactions, as well as a retirement dummy. Model 8 includes industry-specific interactions, as well as retirement and year dummies. As compared to specifications used in Does tax deductibility affect CEO pay? The case of the health insurance industry, these results use Compustat's TDC1 variable as a dependent variable, instead of TOTAL_ALT2.
Source: Authors' analysis of data from Compustat's ExecuComp database.