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Employee Stock Purchase Plans

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  • Engelhardt, Gary V.
  • Madrian, Brigitte C.

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 non–participation.

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Bibliographic Info

Article provided by National Tax Association in its journal National Tax Journal.

Volume (Year): 57 (2004)
Issue (Month): 2 (June)
Pages: 385-406

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Handle: RePEc:ntj:journl:v:57:y:2004:i:2:p:385-406

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References

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  1. Kerwin Kofi Charles & Erik Hurst, 2002. "The Transition To Home Ownership And The Black-White Wealth Gap," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 281-297, May.
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Cited by:
  1. Alex Bryson & Richard B. Freeman, 2010. "To Join or Not to Join? Factors Influencing Employee Share Plan Membership in a Multinational Corporation," NBER Working Papers 16292, National Bureau of Economic Research, Inc.
  2. Thomas Rapp & Nicolas Aubert, 2011. "Bank Employee Incentives and Stock Purchase Plans Participation," Journal of Financial Services Research, Springer, vol. 40(3), pages 185-203, December.

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