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

42 Pages Posted: 14 Mar 2014

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: January 01, 2014

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

Suggested Citation

Aldatmaz, Serdar and Ouimet, Paige and Van Wesep, Edward Dickersin, The Option to Quit: The Effect of Employee Stock Options on Turnover (January 01, 2014). US Census Bureau Center for Economic Studies Paper No. CES-WP- 14-06. Available at SSRN: https://ssrn.com/abstract=2407972 or http://dx.doi.org/10.2139/ssrn.2407972

Serdar Aldatmaz (Contact Author)

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

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

Campus Box 419
Boulder, CO 80309
United States

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