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

January 2014

Working Paper Number:

CES-14-06

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.

Document Tags and Keywords

Keywords Keywords are automatically generated using KeyBERT, a powerful and innovative keyword extraction tool that utilizes BERT embeddings to ensure high-quality and contextually relevant keywords.

By analyzing the content of working papers, KeyBERT identifies terms and phrases that capture the essence of the text, highlighting the most significant topics and trends. This approach not only enhances searchability but provides connections that go beyond potentially domain-specific author-defined keywords.
:
profitability, payroll, earnings, executive, employee, employed, leverage, turnover, revenue, stock, incentive, workforce, contract, decline, layoff, opportunity, prospect

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:
Standard Statistical Establishment List, Internal Revenue Service, Standard Industrial Classification, Bureau of Labor Statistics, Longitudinal Business Database, Center for Research in Security Prices, Chicago Census Research Data Center, Employer Identification Numbers, North American Industry Classification System, Alfred P Sloan Foundation, Longitudinal Employer Household Dynamics

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