Employee Stock Options and Taxes

Courtney Edwards John R. Graham Mark H. Lang Doug Shackelford Abstract: In this paper, we investigate the effect of stock options on the tax position of the firm. We argue that option tax deductions can significantly affect a firm’s marginal tax rate and that the effect is masked by current financial reporting rules. We present an approach for factoring in option deductions in assessing a firm’s tax position and document…
D. Richard Mead Jr. Family Professor of Finance, Fuqua School of Business, Duke University, USA
Meade H. Willis Distinguished Professor of Taxation, Kenan-Flagler Business School, USA
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