Research in accounting and taxation

Abstract

In this Ph.D. project, you can work at the exciting intersection of taxation and managerial accounting. For example, you can study how changes in tax legislation or tax treatments affect executive compensation, performance targets, or the organizational structure of the firm.

Taxes serve three main purposes: 1) Generate revenue for governments to fund their expenditures, 2) redistribute wealth within societies, and 3) steer behavior. Taxes are of great economic significance to companies as they constitute a major cash outflow and affect the group structures of multinationals. Firms react to tax incentives in various ways, including tax avoidance and compliance as well as investment and locational decisions. In the large literature on accounting and taxation, two topics that have not received much attention in prior literature are (1) the role of taxation in compensation contract design, and (2) the effect of taxation on organizational design.

Compensation contract design is a topic in the broader area of managerial accounting and corporate governance and refers to how boards structure the compensation packages of CEOs and other executive managers to ensure that their own personal interests align with the overall objectives of the organization and overall shareholder value creation. 

Organizational design broadly refers to how firms organize their economic activity along markets, product lines, and information channels. Previous research from an accounting perspective in this area has looked at how much decision authority is assigned to local subsidiaries vis-à-vis the corporate headquarters, how many hierarchical and management layers are deployed in a firm to govern economic activity, and how the firm adjusts it labor resources in response to changes in the external environment by hiring and releasing employees.

Keywords

Business taxation, managerial accounting, executive compensation, labor adjustment, organizational design.

Topic

Corporate taxation affects firms’ after-tax profitability and cash flows, which has consequences for investment, financing, and organizational choices (Hanlon and Heitzman, 2010). Changes in tax rates or the tax treatment of specific business activities can also affect how firms evaluate managers and organize their workforce. For instance, a tax reduction can raise reported earnings without improving operating performance, while higher cash tax payments can leave less funds available for compensation, hiring, or expansion. 

This Ph.D. project examines how changes in corporate taxation affect compensation contract design and organizational design. The compensation angle focuses on the relation between taxation and the reliance on different compensation elements (salary, bonus, and equity), performance targets, performance metrics, pay–performance sensitivity, or the use of relative performance evaluation. The organizational perspective concerns decentralization, hierarchical layers, and labor adjustment through hiring and layoffs. The overall objective of this project is to increase our understanding of how firms adjust these arrangements when taxation changes their profitability, cash flows, or incentives to organize activities in particular ways.

Taxation and compensation contract design

Agency theory posits that when managerial effort and actions are unobservable, compensation contracts must balance incentive provision against the costs of exposing managers to risk (Holmström, 1979). Taxation affects this trade-off because after-tax performance reflects both managerial decisions and changes in tax rules. Boards therefore need to determine how tax-related changes in reported performance should be reflected in managerial rewards. Moreover, performance metrics that are correlated with effective tax planning may also reward gains that arise without managerial intervention.

Tax savings may also create opportunities for managerial rent extraction. Lower tax payments increase the resources available within the firm, but governance and compensation design influence how these resources are used. Strong oversight may help ensure that tax savings support investment or benefit shareholders, whereas weak oversight may allow managers to capture part of these gains through higher compensation or projects that provide private benefits (Desai, Dyck, and Zingales, 2007; Desai and Dharmapala, 2006; Fan, Johnson, and Pfeiffer, 2023).

Previous literature has studied some aspects related to this trade-off. For instance, Phillips (2003) links the use of after-tax performance measures for business-unit managers to lower effective tax rates. Andreani, Ellahie, and Shivakumar (2025) find that weakly monitored CEOs receive compensation for tax windfall gains without corresponding penalties for losses. These studies provide initial empirical evidence on how tax outcomes are reflected in managerial compensation.

Another potential research question could be how boards incorporate tax changes into performance targets, metric selection, and incentive strength. For example, a tax-related increase in earnings could make an existing earnings target easier to achieve and thereby affect the incentive strength of the underlying contract. In response, boards may adjust targets, change the weight placed on after-tax earnings, or use measures that exclude tax effects. Relative performance evaluation, which assesses performance against peer firms, could help to filter out shared tax shocks. 

Another possibility would be to study how taxation affects bonus payments through the internal availability of cash. Core and Guay (1999) show that firms use equity grants to adjust CEOs’ equity incentives. Corporate tax savings could increase the availability of cash for bonus payments or reduce the need to conserve cash through equity compensation without eliminating the incentive-related reasons for granting equity. The project could therefore examine whether governance and compensation design shape how tax-related cash-flow gains are allocated among executive compensation, shareholder distributions, and investment.

Taxation may also change the risks that firms want managers to take. Tax rates and loss-offset provisions affect the returns to risky projects, while equity-based compensation can encourage managers to pursue riskier investment and tax-planning strategies. Firms may therefore adjust executives’ risk-taking incentives following tax reforms to maintain the desired balance between encouraging valuable projects and limiting excessive risk. The project could examine whether changes in compensation influence investment, tax planning, and the allocation of organizational resources (Rego and Wilson, 2012; Ljungqvist, Zhang, and Zuo, 2017; Langenmayr and Lester, 2018).

Taxation and organizational design

Organizational economics examines how firms divide decision authority and coordinate economic activity (Aghion and Tirole, 1997). Delegation allows local managers to use information that headquarters may not possess, but it does increase coordination costs and agency problems. For instance, Rajan and Wulf (2006) show that managerial layers and reporting relationships change with changes in incentives. 

Tax reforms may affect both the authority assigned to local managers and the number of management levels needed to oversee activities. Tax rules can also affect the benefits of coordinating decisions across business units. For example, a manager of a high-tax subsidiary may favor an internal transfer price that increases the subsidiary’s reported profit but also raises the group’s tax bill (Baldenius, Melumad, and Reichelstein, 2004). Taxation thus creates interdependencies between business units because a decision that benefits one unit may impose tax costs elsewhere in the organization. This increases the value of central coordination but may reduce the benefits of delegating decisions to local managers.

Firms may respond by centralizing tax-related decisions, strengthening the role of the corporate tax function, or placing greater weight on group-level rather than business-unit performance measures. More complex tax rules may also increase the need for managers and specialists who coordinate decisions across units (Cools, Emmanuel, and Jorissen, 2008). Changes in taxation may consequently affect the relative benefits of centralized control and local discretion, as well as the need for managers who coordinate activities across units. 

Compensation and organizational design may also adjust jointly. When tax-related decision rights are moved between local managers, headquarters, and tax specialists, the responsibility for tax outcomes changes as well. Firms may consequently need to revise performance measures and incentive contracts to ensure that managers are evaluated on outcomes they can influence. For instance, Gallemore, Labro, and Scanlon (2025) associate tax-induced organizational complexity with longer performance horizons and adjusted performance measures. Building on this literature, the project could study how tax-related changes in responsibilities and organizational structure are associated with changes in managerial performance evaluation and incentive provision.

Finally, there may be consequences of taxation for labor adjustment. When hiring employees, firms incur costs in recruiting and training employees and may lose valuable skills when they reduce employment. The literature on cost-stickiness shows that managers often choose to retain committed resources during economic downturns rather than reduce them immediately (Anderson, Banker, and Janakiraman, 2003). Corporate tax changes can affect these decisions by changing the cash available to maintain employment and the after-tax returns to expanding operations. For instance, Giroud and Rauh (2019) document that firms relocate establishments across jurisdictions in response to state taxation. The project could further examine whether tax reforms change firms’ demand for tax specialists and coordinating managers or alter the location of tax-related decision-making within the organization (see, e.g., Barrios and Gallemore, 2024).

Research approach and contribution

The project will use tax reforms and other changes in corporate tax treatment, combined with archival data. ExecuComp and Incentive Lab provide information on executive compensation and compensation contract elements, Revelio Labs has workforce histories, employee movements, occupations, and seniority classifications, and Compustat has other financial information required to construct adequate controls. 

Approach

The research methodology used in this project is archival-based, using financial (accounting and tax) data from commercial databases and panel data econometric methods.

Required profile

The candidate has (a) a background in taxation, accounting, finance, economics, or econometrics, (b) good quantitative skills, and (c) an international focus. 

Required by ERIM

All application documents required by ERIM can be found here.

Expected output

The PhD candidate is expected to complete three research papers (leading to a dissertation) that are potentially publishable in leading accounting journals such as The Accounting Review, Journal of Accounting Research, Journal of Accounting and Economics, Review of Accounting Studies and Contemporary Accounting Research.

Cooperation

The decision to cooperate with other universities or research groups depends on future project choices. It is expected, however, that the Ph.D. candidate will spend at least 6 months at an international university as a visiting scholar.

Societal relevance

Taxation serves several purposes in societies, such as 1) generating revenue for governments to fund their expenditures, 2) redistributing wealth within societies, and 3) steering behavior. This wide-ranging set of consequences can affect the way publicly listed firms remunerate their executives and organize their economic activity. Given the recent discussions on excessive compensation of large public firms and how labor markets absorb new talent, the project can provide important insights into existing societal challenges.

Scientific relevance

Tax legislation and tax research are quickly developing areas where many new laws are passed to curb tax avoidance and enhance transparency and tax enforcement. At the same time, there is relatively little interdisciplinary research that looks at the implications of taxation for areas such as corporate governance and organizational design, which is an opportunity to provide new perspectives and insights by investigating questions at the intersection of these fields.

Literature references & data sources

Aghion, P., and J. Tirole. 1997. Formal and Real Authority in Organizations. Journal of Political Economy 105 (1): 1–29. https://doi.org/10.1086/262063

Anderson, M. C., R. D. Banker, and S. N. Janakiraman. 2003. Are Selling, General, and Administrative Costs “Sticky”? Journal of Accounting Research 41 (1): 47–63.
https://doi.org/10.1111/1475-679X.00095

Andreani, M., A. Ellahie, and L. Shivakumar. 2025. Are CEOs Rewarded for Luck? Evidence from Corporate Tax Windfalls. The Journal of Finance 80 (4): 2255–2302.
https://doi.org/10.1111/jofi.13448

Baldenius, T., N. D. Melumad, and S. Reichelstein. 2004. Integrating Managerial and Tax Objectives in Transfer Pricing. The Accounting Review 79 (3): 591–615. https://doi.org/10.2308/accr.2004.79.3.591

Barrios, J. M., and J. Gallemore. 2024. Tax Planning Knowledge Diffusion via the Labor Market. Management Science 70 (2): 1194–1215. https://pubsonline.informs.org/doi/10.1287/mnsc.2023.4741 

Cools, Martine, Clive Emmanuel, and Ann Jorissen. 2008. “Management Control in the Transfer Pricing Tax Compliant Multinational Enterprise.” Accounting, Organizations and Society 33 (6): 603–628. https://doi.org/10.1016/j.aos.2007.05.004.

Core, J., and W. Guay. 1999. The Use of Equity Grants to Manage Optimal Equity Incentive Levels. Journal of Accounting and Economics 28 (2): 151–184.
https://doi.org/10.1016/S0165-4101(99)00019-1

Desai, M. A., A. Dyck, and L. Zingales. 2007. “Theft and Taxes.” Journal of Financial Economics 84 (3): 591–623. https://doi.org/10.1016/j.jfineco.2006.05.005

Desai, M. A., and D. Dharmapala. 2006. “Corporate Tax Avoidance and High-Powered Incentives.” Journal of Financial Economics 79 (1): 145–179. https://doi.org/10.1016/j.jfineco.2005.02.002

Fan, Q., N. B. Johnson, and T. Pfeiffer. 2023. “The Impact of Intrafirm Incentive Conflicts on the Interplay Between Tax Incidence and Economic Efficiency.” Contemporary Accounting Research 40 (4): 2173–2202. https://doi.org/10.1111/1911-3846.12871

Gallemore, J., E. Labro, and G. Scanlon. 2025. Tax-Induced Organizational Complexity and Executive Performance Measurement. Working Paper. https://doi.org/10.2139/ssrn.4606256

Giroud, X., and J. Rauh. 2019. State Taxation and the Reallocation of Business Activity: Evidence from Establishment-Level Data. Journal of Political Economy 127 (3): 1262–1316.
https://doi.org/10.1086/701357

Hanlon, M., and S. Heitzman. 2010. A Review of Tax Research. Journal of Accounting and Economics 50 (2–3): 127–178. https://doi.org/10.1016/j.jacceco.2010.09.002

Holmström, B. 1979. Moral Hazard and Observability. The Bell Journal of Economics 10 (1): 74–91. https://doi.org/10.2307/3003320

Langenmayr, D., and R. Lester. 2018. “Taxation and Corporate Risk-Taking.” The Accounting Review 93 (3): 237–266. https://doi.org/10.2308/accr-51872 

Ljungqvist, A., L. Zhang, and L. Zuo. 2017. “Sharing Risk with the Government: How Taxes Affect Corporate Risk Taking.” Journal of Accounting Research 55 (3): 669–707. https://doi.org/10.1111/1475-679X.12157 

Phillips, J. D. 2003. Corporate Tax-Planning Effectiveness: The Role of Compensation-Based Incentives. The Accounting Review 78 (3): 847–874. https://doi.org/10.2308/accr.2003.78.3.847

Rajan, R. G., and J. Wulf. 2006. The Flattening Firm: Evidence from Panel Data on the Changing Nature of Corporate Hierarchies. The Review of Economics and Statistics 88 (4): 759–773. https://doi.org/10.1162/rest.88.4.759

Rego, S. O., and R. Wilson. 2012. “Equity Risk Incentives and Corporate Tax Aggressiveness.” Journal of Accounting Research 50 (3): 775–810. https://doi.org/10.1111/j.1475-679X.2012.00438.x 

Employment conditions

ERIM offers fully-funded and salaried PhD positions, which means that accepted PhD candidates become employees (promovendi) of Erasmus University Rotterdam. Salary and benefits are in accordance with the Collective Labour Agreement for Dutch Universities (CAO).

Erasmus University Rotterdam aspires to be an equitable and inclusive community. We nurture an open culture, where everyone is supported to fulfil their full potential. We see inclusivity of talent as the basis of our successes, and the diversity of perspectives and people as a highly valued outcome. EUR provides equal opportunities to all employees and applicants regardless of gender identity or expression, sexual orientation, religion, ethnicity, age, neurodiversity, functional impairment, citizenship, or any other aspect which makes them unique. We look forward to welcoming you to our community.

Contact information

For questions regarding the PhD application and selection procedure, please check the Admissions or contact the PhD Doctoral Office at phdadmissions@erim.eur.nl.