【主 题】Retention Effects of Employee Stock Option：Evidence from Bunching at Vesting Dates
【报告人】张红（暨南大学 产业经济研究院 讲师）
【主持人】 汪晨 博士
Whether employee stock options bring the firm enough benefit to justify the cost is at the center of much debate. We study the retention effect of stock options to reconcile their popularity and high granting costs. We use the bunching design to address the endogeneity problem and identify the causal effects of options on retention. Using a novel administrative panel dataset at the individual employee level, we find that option owners delay quitting until options vest to minimize the opportunity cost of quitting. The bunching at the vesting dates is significant and sizable: the quitting of option owners more than doubles shortly after options vest. We find that the bunching effect is robust to alternative explanations, stronger when option values are high, unique to voluntary quitters but absent among owners who leave involuntarily. We also verify that the retained option owners have superior performance, and conduct a simple benefit-cost analysis with the baseline estimates. We find that the retention benefits contribute greatly to the total benefit of options, which exceeds 95-275% of the granting cost. Accounting for the retention effects of options can avoid the potential underestimation of the benefit-cost ratio, thereby helping to reconcile the popularity of options and the high granting costs.