Rank-and-File Employee Stock Options and Workplace Safety

Yangyang Chen (), Emmanuel Ofosu (), Don O’Sullivan (), Madhu Veeraraghavan () and Leon Zolotoy ()
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Yangyang Chen: Department of Accountancy, City University of Hong Kong, Hong Kong, China
Emmanuel Ofosu: Department of Accountancy, Lingnan University, Hong Kong, China
Don O’Sullivan: Melbourne Business School, The University of Melbourne, Carlton, Victoria 3053, Australia
Madhu Veeraraghavan: T A Pai Management Institute, Manipal Academy of Higher Education, Manipal, Karnataka 576104, India
Leon Zolotoy: Melbourne Business School, The University of Melbourne, Carlton, Victoria 3053, Australia

Management Science, 2025, vol. 71, issue 7, 5971-5996

Abstract: We provide robust evidence that rank-and-file employee stock options (R&F options) lead to lower work-related injury rates. This finding is consistent with the view that R&F options improve workplace safety by facilitating employee retention and cooperation. To establish causality, we employ difference-in-differences analysis around the passage of FAS 123R option expensing regulation and instrumental variable estimation. In cross-sectional analysis, we find that the documented effect is amplified among firms with higher labor mobility rates and among firms with greater scope for employee free riding. The results of supplemental analysis suggest that work-related injuries adversely impact firm performance and rule out reduced employee whistleblowing about workplace safety issues as an alternative mechanism driving our findings.

Keywords: rank-and-file employee stock options; workplace safety; work-related injury rates; employee retention; employee cooperation (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:71:y:2025:i:7:p:5971-5996

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