Kiffin has held the Oakland head coaching job for one year. His team went 4-12 in 2007 and he has two years remaining on his contract.
The newspaper said Davis had not fired Kiffin because to do so would mean the Raiders would have to pay the coach $4 million in guaranteed money.
The report also said Davis sent Kiffin a letter this week saying Kiffin would not be involved in the NFL draft, would not be involved in free agent meetings and would no longer have control of his coaching staff.
Amy Trask, the Raiders chief executive officer, denied Kiffin had been stripped of any authority.
"That's simply not true," Trask told the Chronicle. "He has all the authority he had when he was hired."