Keywords
employee stock purchase plans, tax advantages, plan participation
Abstract
Employee stock purchase plans (ESPPs) are designed to promote employee stock ownership broadly within the firm and provide another tax-deferred vehicle for individual capital accumulation in addition to traditional pensions, 401(k)s, and stock options. We outline the individual and corporate tax treatment of ESPPs and the circumstances under which ESPPs will be preferred to cash compensation from a purely tax perspective. We then examine empirically ESPP participation using administrative data from 1997-2001 for a large health services company that employs approximately 30,000 people. The picture that emerges from the analysis of these data suggests that there is substantial non-participation in these plans even though all employees could increase gross compensation through participation. We discuss a number of potential explanations for nonparticipation.
Original Publication Citation
“Employee Stock Purchase Plans.” 2004. National Tax Journal, 57(2): 385-406 (with Gary V. Engelhardt). http://ntj.tax.org/
BYU ScholarsArchive Citation
Engelhardt, Gary V. and Madrian, Brigitte C., "Employee Stock Purchase Plans" (2004). Faculty Publications. 9068.
https://scholarsarchive.byu.edu/facpub/9068
Document Type
Peer-Reviewed Article
Publication Date
2004
Publisher
National Tax Journal
Language
English
College
Marriott School of Business
Department
Finance
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