Abstract
This paper analyzes tax planning by holders of employee stock options and examines their response to a proposed tax rate increase. Consistent with tax planning, the frequency of exercise is greater for employees affected by the tax change than for (1) employees unlikely to be affected by the tax increase who contemporaneously held identical options, and (2) employees with comparable incomes who held similar options in other years. Despite the greater frequency of exercise, less than one-third of the option holders who would benefit most from exercise for tax reasons chose to exercise early.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 203-216 |
| Number of pages | 14 |
| Journal | Contemporary Accounting Research |
| Volume | 15 |
| Issue number | 2 |
| DOIs | |
| State | Published - Jan 1 1998 |
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All Science Journal Classification (ASJC) codes
- Accounting
- Finance
- Economics and Econometrics
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Tax planning and the exercise of employee stock options. / Huddart, Steven J.
In: Contemporary Accounting Research, Vol. 15, No. 2, 01.01.1998, p. 203-216.Research output: Contribution to journal › Article
TY - JOUR
T1 - Tax planning and the exercise of employee stock options
AU - Huddart, Steven J.
PY - 1998/1/1
Y1 - 1998/1/1
N2 - This paper analyzes tax planning by holders of employee stock options and examines their response to a proposed tax rate increase. Consistent with tax planning, the frequency of exercise is greater for employees affected by the tax change than for (1) employees unlikely to be affected by the tax increase who contemporaneously held identical options, and (2) employees with comparable incomes who held similar options in other years. Despite the greater frequency of exercise, less than one-third of the option holders who would benefit most from exercise for tax reasons chose to exercise early.
AB - This paper analyzes tax planning by holders of employee stock options and examines their response to a proposed tax rate increase. Consistent with tax planning, the frequency of exercise is greater for employees affected by the tax change than for (1) employees unlikely to be affected by the tax increase who contemporaneously held identical options, and (2) employees with comparable incomes who held similar options in other years. Despite the greater frequency of exercise, less than one-third of the option holders who would benefit most from exercise for tax reasons chose to exercise early.
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UR - http://www.scopus.com/inward/citedby.url?scp=0007284573&partnerID=8YFLogxK
U2 - 10.1111/j.1911-3846.1998.tb00556.x
DO - 10.1111/j.1911-3846.1998.tb00556.x
M3 - Article
VL - 15
SP - 203
EP - 216
JO - Contemporary Accounting Research
JF - Contemporary Accounting Research
SN - 0823-9150
IS - 2
ER -