Activities per year
Abstract
Purpose
– This paper aims to derive firm value implications for various kinds of employee stock options (ESOs) in a framework that considers uncertainty, non‐diversification and the US statutory tax treatment.
Design/methodology/approach
– The authors extend the analysis of ESOs from the case of perfect capital markets to two cases of imperfect capital markets using the Benninga‐Helmantel‐Sarig framework.
Findings
– It is found that ESOs are inferior to cash compensation and that the degree of option inferiority depends on employee diversification. In addition, incentive stock options (ISOs) are generally inferior to non‐qualified stock options (NSOs). This relative profitability of the NSO versus ISO increases as market imperfections are added. The authors also find that in general firm hedging of ESOs is suboptimal.
Originality/value
– The paper highlights the firm value of employee stock options.
Original language | American English |
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State | Published - 2008 |
Event | Arne Ryde workshop in Financial Economics - Lund, Sweden Duration: 6 Apr 2008 → 7 Apr 2008 |
Conference
Conference | Arne Ryde workshop in Financial Economics |
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Country/Territory | Sweden |
City | Lund |
Period | 6/04/08 → 7/04/08 |
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Dive into the research topics of 'Taxation and the Value of Employee Stock Options'. Together they form a unique fingerprint.Activities
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Arne Ryde workshop in Financial Economics
Abudy, M. (Participation - Conference participant)
6 Apr 2008 → 7 Apr 2008Activity: Participating in or organizing an event › Organizing a conference, workshop, ...