TY - JOUR
T1 - Non-executive employee stock options and corporate innovation
AU - Chang, Xin
AU - Fu, Kangkang
AU - Low, Angie
AU - Zhang, Wenrui
N1 - Funding Information:
We are grateful for the valuable comments and suggestions from the referee (Edward D. Van Wesep), Renée Adams, Ilona Babenko, Dong Chen, Po-Hsuan (Paul) Hsu, Woojin Kim, and seminar participants at City University of Hong Kong, EM Lyon Business School, Erasmus University Rotterdam, Korea University, Nanyang Technological University, Seoul National University, University of Stavanger, the 2012 China International Conference in Finance, the 2013 Midwest Finance Association Annual Meeting, and the 2013 Asian Bureau of Financial and Economics Research Inaugural Conference. We also thank Shih Chia Mei (Carmen) for her excellent research assistance. Chang acknowledges financial support from Rega Capital Management Limited and Academic Research Fund Tier 1 provided by Ministry of Education (Singapore). All errors are our own.
Publisher Copyright:
© 2014 Elsevier B.V.
PY - 2015/1
Y1 - 2015/1
N2 - 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.
AB - 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.
KW - Corporate innovation
KW - Employee compensation
KW - Employee stock options
KW - Risk-taking incentives
UR - http://www.scopus.com/inward/record.url?scp=84916227523&partnerID=8YFLogxK
U2 - 10.1016/j.jfineco.2014.09.002
DO - 10.1016/j.jfineco.2014.09.002
M3 - Journal article
AN - SCOPUS:84916227523
SN - 0304-405X
VL - 115
SP - 168
EP - 188
JO - Journal of Financial Economics
JF - Journal of Financial Economics
IS - 1
ER -