The Option to Quit: The Effect of Employee Stock Options on Turnover

46 Pages Posted: 21 Mar 2011 Last revised: 9 Jan 2018

See all articles by Serdar Aldatmaz

Serdar Aldatmaz

George Mason University - Department of Finance

Paige Ouimet

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

Edward Dickersin Van Wesep

University of Colorado at Boulder - Department of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: October 2017

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

JEL Classification: G30, J33

Suggested Citation

Aldatmaz, Serdar and Ouimet, Paige and Van Wesep, Edward Dickersin, The Option to Quit: The Effect of Employee Stock Options on Turnover (October 2017). Available at SSRN: https://ssrn.com/abstract=1787169 or http://dx.doi.org/10.2139/ssrn.1787169

Serdar Aldatmaz

George Mason University - Department of Finance ( email )

Fairfax, VA 22030
United States

Paige Ouimet

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

Edward Dickersin Van Wesep (Contact Author)

University of Colorado at Boulder - Department of Finance ( email )

Campus Box 419
Boulder, CO 80309
United States

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