Non-executive employee stock options and corporate innovation

Xin Chang, Kangkang Fu, Angie Low, Wenrui Zhang*

*Corresponding author for this work

Research output: Contribution to journalJournal articlepeer-review

307 Citations (Scopus)


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.

Original languageEnglish
Pages (from-to)168-188
Number of pages21
JournalJournal of Financial Economics
Issue number1
Early online date8 Sept 2014
Publication statusPublished - Jan 2015

Scopus Subject Areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management

User-Defined Keywords

  • Corporate innovation
  • Employee compensation
  • Employee stock options
  • Risk-taking incentives


Dive into the research topics of 'Non-executive employee stock options and corporate innovation'. Together they form a unique fingerprint.

Cite this