Backdating, tax evasion, and the unintended consequences of Canadian tax reform
In 1984 and 2000, significant changes were made to the tax treatment of employee stock options in Canada. Although designed to increase the use of stock options as a compensation vehicle (1984) and decease the loss of knowledge workers (2000), we argue that these tax changes were largely ineffective and perhaps unneeded. Further we demonstrate the negative unintended consequences of these actions, specifically that they reward the backdating of employee stock options and promote tax evasion, and discuss the policy implications of these unintended consequences.
|Date of creation:||2010|
|Date of revision:|
|Publication status:||Published in Tax Notes International 9.59(2010): pp. 671|
|Contact details of provider:|| Postal: |
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Brian J. Hall & Kevin J. Murphy, 2003. "The Trouble with Stock Options," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 49-70, Summer.
- Randall A. Heron & Erik Lie, 2009. "What Fraction of Stock Option Grants to Top Executives Have Been Backdated or Manipulated?," Management Science, INFORMS, vol. 55(4), pages 513-525, April.
- Brian J. Hall & Jeffrey B. Liebman, 2000.
"The Taxation of Executive Compensation,"
in: Tax Policy and the Economy, Volume 14, pages 1-44
National Bureau of Economic Research, Inc.
- Ittner, Christopher D. & Lambert, Richard A. & Larcker, David F., 2003. "The structure and performance consequences of equity grants to employees of new economy firms," Journal of Accounting and Economics, Elsevier, vol. 34(1-3), pages 89-127, January.
- M. P. Narayanan & H. Nejat Seyhun, 2008. "The Dating Game: Do Managers Designate Option Grant Dates to Increase their Compensation?," Review of Financial Studies, Society for Financial Studies, vol. 21(5), pages 1907-1945, September.
- Donohue, John J. & Levitt, Steven D., 2000.
"The Impact of Legalized Abortion on Crime,"
Berkeley Olin Program in Law & Economics, Working Paper Series
qt00p599hk, Berkeley Olin Program in Law & Economics.
- Compton, Ryan & Sandler, Daniel & Tedds, Lindsay M., 2010. "Options backdating: a Canadian perspective," MPRA Paper 39787, University Library of Munich, Germany.
- David Zarifa & David Walters, 2008. "Revisiting Canada's Brain Drain: Evidence from the 2000 Cohort of Canadian University Graduates," Canadian Public Policy, University of Toronto Press, vol. 34(3), pages 305-320, September.
- Carpenter, Jennifer N & Remmers, Barbara, 2001. "Executive Stock Option Exercises and Inside Information," The Journal of Business, University of Chicago Press, vol. 74(4), pages 513-34, October.
- Chip Heath & Steven Huddart & Mark Lang, 1999. "Psychological Factors And Stock Option Exercise," The Quarterly Journal of Economics, MIT Press, vol. 114(2), pages 601-627, May.
- David Joulfaian, 2000. "Corporate Income Tax Evasion and Managerial Preferences," The Review of Economics and Statistics, MIT Press, vol. 82(4), pages 698-701, November.
- Eli Ofek & David Yermack, 2000. "Taking Stock: Equity-Based Compensation and the Evolution of Managerial Ownership," Journal of Finance, American Finance Association, vol. 55(3), pages 1367-1384, 06.
- Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November.
- Erik Lie, 2005. "On the Timing of CEO Stock Option Awards," Management Science, INFORMS, vol. 51(5), pages 802-812, May.
- Brian J. Hall & Kevin J. Murphy, 2003. "The Trouble with Stock Options," NBER Working Papers 9784, National Bureau of Economic Research, Inc.
- Heron, Randall A. & Lie, Erik, 2007. "Does backdating explain the stock price pattern around executive stock option grants?," Journal of Financial Economics, Elsevier, vol. 83(2), pages 271-295, February.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:39788. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht)
If references are entirely missing, you can add them using this form.