The Impact of Corporate and Personal Taxes on the Valuation of Employee Stock Options

  title={The Impact of Corporate and Personal Taxes on the Valuation of Employee Stock Options},
  author={Phillip R. Daves and TN and Michael C. Ehrhardt},
We incorporate the impact of corporate and personal taxes into the valuation of employee stock options. We provide three new results. First, we show that the fair value of the ESO, defined by the Financial Accounting Standards Board (FASB) in Financial Accounting Standards (FAS) No. 123, Accounting for Stock-Based Compensation, as the price that a willing investor would pay for the security, is less than the value given by a call option pricing model but greater than the value given by a… CONTINUE READING

From This Paper

Figures, tables, and topics from this paper.
0 Citations
19 References
Similar Papers


Publications referenced by this paper.
Showing 1-10 of 19 references

Firm Performance, Capital Structure, and the Tax Benefits

  • K. M. Kahle, K. Shastri
  • Stock Option Plans,” Journal of Financial…
  • 2005
Highly Influential
4 Excerpts

Transferable Stock Options (TSOs) and the Coming Revolution in EquityBased Pay,

  • B. J. Hall
  • Journal of Applied Corporate Finance,
  • 2004
Highly Influential
3 Excerpts

Expensing Executive Stock Options: Sorting Out the Issues,

  • Chance, M Don
  • Working Paper, SSRN
  • 2004

Options, Futures, & Other Derivatives, 5 edition

  • J. C. 207-231. Hull
  • 2003
2 Excerpts

Taxes and Corporate Finance: A Review,

  • J. R. Graham
  • Review of Financial Studies,
  • 2003
1 Excerpt

Larcker (forthcoming after 2002), “Executive Equity Compensation and Incentives: A Survey,

  • J. E. Core, W. R. Guay, D.F
  • Federal Reserve Bank of New York, Economic Policy…
  • 2002

Poterba, ed

  • J. Economy
  • 2002

The Economic Dilution of Employee Stock Options: Diluted EPS for Valuation and Financial Reporting,

  • J. E. Core, W. R. Guay, S. P. Kothari
  • The Accounting Review,
  • 2002

Similar Papers

Loading similar papers…