The option to quit: The effect of employee stock options on turnover

Serdar Aldatmaz, Paige Ouimet and Edward D Van Wesep

Journal of Financial Economics, 2018, vol. 127, issue 1, 136-151

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 third year following the year of the adoption of the BBSO plan. The increase three years post-grant is equal in magnitude to the cumulative decrease in turnover over the three prior years, suggesting that long-vesting BBSO plans delay, instead of prevent, turnover.

Keywords: Employee stock options; Turnover (search for similar items in EconPapers)
JEL-codes: G30 J33 J63 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:127:y:2018:i:1:p:136-151

DOI: 10.1016/j.jfineco.2017.10.007

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