Non-executive employee stock options and corporate innovation

Xin Chang, Kangkang Fu, Angie Low and Wenrui Zhang

Journal of Financial Economics, 2015, vol. 115, issue 1, 168-188

Abstract: We provide empirical evidence on the positive effect of non-executive employee stock options on corporate innovation. The positive effect is more pronounced when employees are more important for innovation, when free-riding among employees is weaker, when options are granted broadly to most employees, when the average expiration period of options is longer, and when employee stock ownership is lower. Further analysis reveals that employee stock options foster innovation mainly through the risk-taking incentive, rather than the performance-based incentive created by stock options.

Keywords: Employee stock options; Corporate innovation; Risk-taking incentives; Employee compensation (search for similar items in EconPapers)
JEL-codes: J33 M52 O31 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (154)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:115:y:2015:i:1:p:168-188

DOI: 10.1016/j.jfineco.2014.09.002

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