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Is Simple Better? A Conjoint Analysis of the Effects of Tax Complexity on Employee Preferences Concerning Company Pension Plans

  • Tax Complexity
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Schmalenbach Business Review Aims and scope

Abstract

We theoretically and empirically analyze the influence of tax complexity on the employee’s decision concerning company pension plans. Our model also considers employer signaling and information intermediation by various actors. The main result of our empirical analysis is that if tax complexity is high, then only a small proportion of the study participants bases their decision on their after-tax return. This proportion increases significantly if tax complexity is low. However, even in a simple tax system, many people do not base their decisions on after-tax returns, but instead follow the advice of an independent product rating agency or a works council representative.

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Authors and Affiliations

  1. Faculty of Business Administration and Economics, Europa-Universität Viadrina, Große Scharrnstraße 59, 15230, Frankfurt (Oder), Germany

    Kay Blaufus (Professor of Finance)

  2. Institute of Management — Human Resource Management, Freie Universität Berlin, Boltzmannstraße 20, 14195, Berlin, Germany

    Renate Ortlieb (Assistant Professor)

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  1. Kay Blaufus
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  2. Renate Ortlieb
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Correspondence to Kay Blaufus.

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Order of authors is alphabetical. Both authors contributed equally to this article.

We would like to thank two anonymous reviewers, the participans of the Third Annual Arqus Conference, the participans of the Fifth Annual AKempor Conference, and the participans of the 69th Annual Meeting of the German Academic Association for Business Research for their helpful comments.

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Blaufus, K., Ortlieb, R. Is Simple Better? A Conjoint Analysis of the Effects of Tax Complexity on Employee Preferences Concerning Company Pension Plans. Schmalenbach Bus Rev 61, 60–83 (2009). https://doi.org/10.1007/BF03396780

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