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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 174.54-1.2%3:59 PM EST
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To: Clarksterh who wrote (122020)7/27/2002 6:14:37 PM
From: rkral  Read Replies (1) of 152472
 
OT ... Companies [..] will be incentivized to maximize the option value in order to minimize their taxes [...] For instance if the options are valued using Black Scholes at the time of issuance then there will be incentive for the company to increase volatility, and this is something that is easy for a company to do and very hard to prove.

I don't understand your point here. For companies that choose the 'intrinsic value' method of FAS 123 (that would be about 99% of companies in S&P500), there is no relationship between the tax credit at exercise and the Black-Scholes value at grant.

Are you talking about the 'fair value' method of FAS 123? Please clarify.

Ron

P.S. Subject 53027, an employee stock options thread.
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