In order to answer the above questions, we intend to investigate and explain (i) how entrepreneurial companies are built; (ii) why options can be an effective way to reward key employees – especially those who make entrepreneurial decisions; (iii) how options should be treated for tax purposes; and (iv) the importance of contractual flexibility for institutional investors. In particular, we intend to analyze the use of options in growing entrepreneurial companies, not in listed companies with widespread ownership.
Our main hypothesis is that differences between the use of options to create effective agreements between entrepreneurs and key employees on the one hand and external financiers on the other is to search the design of the tax system. We will therefore first seek to identify in detail crucial differences in the Swedish and US tax rules in this regard and then, at a slightly less detailed level, do so for as wide a selection of countries as possible.