Patterns of stock option exercise in the United States
provide optionees with incentives to increase the stock price of the firm;
serve as ‘golden handcuffs’ that bind optionees to firms during the vesting period;
allow optionees to recognize income at times that coincide with favorable tax treatment or personal liquidity needs; and
may be treated as ‘off income statement compensation’ by the employer for financial statement purposes.
KeywordsStock Price Stock Option None None Strike Price Early Exercise
Unable to display preview. Download preview PDF.
- Huddart, S. (1994). Employee stock options. Journal of Accounting and Economics,18, 207–231 Huddart, S. (1998). Tax planning and the exercise of employee stock options. Contemporary Accounting Research,15, in press.Google Scholar
- Jennergren, L.P. (1997). On the Valuation of a Change in Tax Systems for Employee Stock Options. Working Paper, Stockholm School of Economics.Google Scholar
- Klassen, K. and A. Mawani (1998). The Impact of Financial and Tax Reporting Incentives on Option Grants to Canadian CEOs. Working Paper, University of Waterloo.Google Scholar
- Matsunaga, S.R. (1995). The effects of financial reporting costs on the use of employee stock options. Accounting Review, 70, 1–16.Google Scholar
- Mawani, A. (1995). Cancellation of Executive Stock Options: Tax and Accounting Income Considerations. Unpublished PhD dissertation, University of Waterloo.Google Scholar
- Scholes, M.S. and M.A. Wolfson (1992). Taxes and Business Strategy: A Planning Approach. Englewood Cliffs, NJ, Prentice-Hall.Google Scholar