Employee stock purchase plans

Gary V. Engelhardt, Brigitte C. Madrian

Research output: Contribution to journalReview article

8 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)385-406
Number of pages22
JournalNational Tax Journal
Volume57
Issue number2 II
DOIs
StatePublished - Jun 2004

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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