THE OPTION TO QUIT: THE EFFECT OF EMPLOYEE STOCK OPTIONS ON TURNOVER

Serdar Aldatmaz, Paige Ouimet and Edward D Van Wesep

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: We show that in the years following a large broad-based employee stock option (BBSO) grant, employee turnover falls at the granting firm. We find evidence consistent with a causal relation by exploiting unexpected changes in the value of unvested options. A large fraction of the reduction in turnover appears to be temporary with turnover increasing in the 3rd year following the year of the adoption of the BBSO plan. We also find that the effect of BBSO plans is larger at market leaders, identified as firms with high industry-adjusted market-to-book ratios, market share or industry-adjusted profit margins, as measured at the time of the grant.

Keywords: Employee stock options; turnover (search for similar items in EconPapers)
Pages: 42 pages
Date: 2014-01
New Economics Papers: this item is included in nep-bec
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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https://www2.census.gov/ces/wp/2014/CES-WP-14-06.pdf First version, 2014 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:14-06

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