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Employee stock option plan and employee attitudes: A test of extrinsic versus intrinsic models

T.T. Selvarajan (University of Houston‐Victoria, Sugar Land, Texas, USA)
Nagarajan Ramamoorthy (University of Houston‐Victoria, Sugar Land, Texas, USA)
Patrick Flood (Department of Personnel and Employment Relations, School of Business, University of Limerick, Limerick, Ireland.)
Peter Rowley (Department of Personnel and Employment Relations, School of Business, University of Limerick, Limerick, Ireland.)

International Journal of Sociology and Social Policy

ISSN: 0144-333X

Article publication date: 1 May 2006

2269

Abstract

Purpose

The objective of this research is to present a causal model of the influence of stock options on psychological contract and employee attitudes, and report results of an initial empirical examination of this model.

Design/methodology/approach

To test the model, data were collected using a survey methodology from 98 employees in a large financial services firm. Multiple‐regression equations were used to derive the path coefficients.

Findings

The psychological contract variable of met expectations mediated the relationships between stock options and tenure intent and organizational commitment thus providing support for the intrinsic value model. Equity perceptions mediated the relationship between stocks exercised and met expectations. Equity perceptions, however, did not mediate the relationship between stock options and employee attitudes. Similarly, stock earnings also had a direct effect on external career intent indicating that employees who had exercised their stock options were looking for outside career opportunities contrary to our hypothesis.

Research limitations/implications

Future studies should attempt to reconcile the intrinsic versus extrinsic value stock options may have on employee attitudes. These results should be considered tentative and interpreted with caution due to the cross‐sectional nature of data. The support for the intrinsic model suggests that organizations that use stock options may expect positive attitudes from their employees.

Originality/value

This is believed to be the first study that attempts to develop and test a causal model.

Keywords

Citation

Selvarajan, T.T., Ramamoorthy, N., Flood, P. and Rowley, P. (2006), "Employee stock option plan and employee attitudes: A test of extrinsic versus intrinsic models", International Journal of Sociology and Social Policy, Vol. 26 No. 5/6, pp. 245-254. https://doi.org/10.1108/01443330610674288

Publisher

:

Emerald Group Publishing Limited

Copyright © 2006, Emerald Group Publishing Limited

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