The option to quit: The effect of employee stock options on turnover |
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Authors: | Serdar Aldatmaz Paige Ouimet Edward D Van Wesep |
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Affiliation: | 1. George Mason University, School of Business, 4400 University Dr., Fairfax, VA 22030, United States;2. University of North Carolina at Chapel Hill, Kenan-Flagler Business School, Campus Box 3490, McColl Building, Chapel Hill, NC 27599, United States;3. University of Colorado at Boulder, Leeds School of Business, 995 Regent Dr., Boulder, CO 80302, United States |
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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. |
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Keywords: | Employee stock options Turnover J33 J63 G30 |
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