Publication Date

April 2001


This study empirically examines the popularized influence of underwater stock options on employee job search behavior. In a multi-industry sample of executives we find a positive relationship between the percentage of employee stock options that are underwater and job search frequency. In addition, we find that this relationship is moderated by important situational and individual difference variables. In particular, symbolic attributions toward money moderated participant’s sensitivity to underwater options. Participants making more positive money attributions (e.g., money represents achievement, status, and strong work ethic) were more likely to engage in search when facing underwater options. Conversely, we found no moderating effect for perceived financial independence. These results suggest that the symbolic value of money is more important to executives than the economic value of money as reflected by its influence on job search behavior.


Suggested Citation
Dunford, B. B., Boudreau, J. W. & Boswell, W. R. (2001). The dark side of stock options: Downside risk and employee separation (CAHRS Working Paper #01-09). Ithaca, NY: Cornell University, School of Industrial and Labor Relations, Center for Advanced Human Resource Studies.