tailieunhanh - EMPLOYEE STOCK PURCHASE PLANS: NATIONAL BUREAU OF ECONOMIC RESEARCH

For portfolio managers the question if the rise in synchronization across national equity markets is driven by fundamentals, and therefore likely to be permanent, or if it is linked to the recent stock market bubble, and therefore temporary, is critical. This is because portfolio managers have traditionally followed a top-down approach, first choosing countries in which to invest and then selecting the best securities in each market. This approach is consistent with the view that variation in international stock returns is due mainly to country effects, a view that was until recently validated by academic research. For example, Heston and Rouwenhorst (1994, 1995) show that country-specific sources. | NBER WORKING PAPER SERIES EMPLOYEE STOCK PURCHASE PLANS Gary V. Engelhardt Brigitte C. Madrian Working Paper 10421 http papers w10421 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge MA 02138 April 2004 Prepared for the NBER Taxation and Saving Conference August 1 2003. We would like to thank Diane Eberlein Kara Anderson and David Docherty at Hewitt Associations for their help with the data Rosanne Altshuler Christopher Cunningham James Poterba Roger Gordon and two anonymous referees for useful comments and Daniel Feenberg for assistance with TAXSIM. All errors are our views expressed herein are those of the author s and not necessarily those of the National Bureau of Economic Research. 2004 by Gary V. Engelhardt and Brigitte C. Madrian. All rights reserved. Short sections of text not to exceed two paragraphs may be quoted without explicit permission provided that full credit including notice is given to the source. Employee Stock Purchase Plan Gary V. Engelhardt and Brigitte C. Madrian NbEr Working Paper No. 10421 April 2004 JEL No. H2 J3 G1 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. Gary V. Engelhardt .