Why do employees hold their vested stocks while they can sell them?

Abstract

We proposed an integrated model of risk-balancing arguments and the emergence of psychological ownership to investigate employees' propensity of holding awarded stocks under a broad-based stock incentive plan. Analysis was conducted using a sample of 391 employees of a semiconductor foundry located in Taiwan. The results provided strong indication that psychological ownership motivation contribute to explain employees' willingness to hold vested stocks from broad-based stock plans. This study provide stimulating insight into the psychological mechanisms through which the individual's risk-aversion and wealth effects influence employees' intentions to hold vested stocks and further extends our understanding on how broad-based stock plans can develop an employees sense of ownership.

Keywords:

• broad-based stock plan
• ownership intention
• psychological ownership
• risk preference

Acknowledgements

This research is supported by the grant from National Science Council of Taiwan (NSC 93-2416-H-008-026-SSS).