Employee Stock Options, Corporate Taxes and Debt Policy


Written by: John R. Graham, Mark H. Lang and Douglas A. Shackelford Abstract: We find that employee stock option deductions lead to large aggregate tax savings for Nasdaq 100 and S&P 100 firms and also affect corporate marginal tax rates. For Nasdaq firms, including the effect of options reduces the estimated median marginal tax rate from 31 percent to 5 percent. For S&P firms, in contrast, option deductions do not…
D. Richard Mead Jr. Family Professor of Finance, Fuqua School of Business, Duke University, USA
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