Seminar No. 224

Title: Employee Mobility Restrictions and Non-executive Employee Stock Options

Speaker: Yun Dai, Sun Yat-sen University

Time: May 15th, 2020    13:30-15:00     

Venue: Online

About the speaker:

Yun Dai is an Assistant Professor of Finance at Lingnan (University) College, Sun Yat-sen University. She obtained Ph.D. in Finance from Erasmus University Rotterdam in 2014. Her research interests span the areas of corporate finance, experimental and behavioral finance and credit misallocation in China. Dai’s work has appeared in such journals as Journal of Financial and Quantitative Analysis, Games and Economic Behavior, and Journal of Economic Dynamics and Control.

Abstract:

This paper studies the effect of reduced employee mobility on employers’ incentive to grant stock options for employee retention purpose. Exploiting staggered amendments of non-compete enforceability in three U.S. states as an exogenous shock to employee mobility, we find that stricter enforcement of non-compete clauses in a state negatively affects the value of stock options granted to non-executive employees by firms in the state. Furthermore, this negative effect is more pronounced for firms with higher competition for human capital. These findings suggest that stronger non-compete enforcement weakens firms’ needs of using stock options to retain employees. Our findings reveal the importance of legal restrictions on employee mobility in shaping corporate employee compensation policies.

Interested in this webinar? Please contact Feiyan at feiyantang@jnu.edu.cn by May 14th (12 PM) to register.