Non-Executive Employee Stock Options and Corporate Innovation

By Xin Chang, Kangkang Fu, A. Low, Wenrui Zhang. 2015

546 citations recorded by the source corpus.

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.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/65a9af0c2d33d63b1ed147b6716c4a29aad4fde1

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Citations in the corpus

Be nice to your innovators: employee treatment and corporate innovation performance (2016, background): “Chang et al. (2015) show that the granting of non-executive stock options has a positive impact on”
Friendly Boards and Innovation (2018, unknown): “Following Chang et al. (2013), in defining our IV, we consider only nearby firms in different Fama-French 48 industries to avoid local knowledge spillovers across firms in the same industry.”
Local Gambling Preferences and Corporate Innovative Success (2014, background): “…ﬁrms inﬂuenced by a pro-gambling culture are more likely to offer incentive contracts that encourage investment in risky projects (Manso (2011), Chang et al. (2014)), and managers inﬂuenced by gambling preferences are more likely to risk the wrath of investors in pursuit of the high potential…”
Corruption and Corporate Innovation (2019, unknown): “Ethnicities in power may also support corrupt politicians who favor their own ethnicity at the expense of others (see Glaeser and Saks (2006), Easterly and Levine (1997), and Mauro (1995)).”
Corporate Innovation Along the Supply Chain (2018, unknown): “…et al. 2015), firm boundaries (Bena and Li 2014, Seru 2014), management compensation (Baranchuk et al. 2014), financial development (Hsu et al. 2014), governance (Chemmanur and Tian 2017), non-executive compensation (Chang et al. 2015), Brav et al. (2017), and analyst coverage (He and Tian 2013).”
The influence of corporate social responsibility on investment efficiency and innovation (2019, unknown): “While the potential benefits of innovation are clear, the ability and willingness to innovate are less clear, given that the innovation process is long, full of uncertainty, and has a high probability of failure (Holmstrom 1989; Chang et al. 2015; Hsu et al. 2014).”
Credit default swaps and corporate innovation (2019, unknown): “To correct for this bias, we follow prior studies (e.g., Chang et al., 2015) and adjust the raw citation counts using the fixedeffect approach, which involves scaling the raw citation counts by the average citation counts of all 14 We…”
Does managerial ability facilitate corporate innovative success (2015, unknown): “Consistent with the extant literature on corporate innovation (Hirshleifer et al., 2012; Chang et al., 2015; He and Tian, 2013), we also collect data on return on assets (ROA), book leverage, cash holdings, sales growth, and Tobin‟s Q. ROA is the ratio of operating income over book assets.”
Brain drain: The impact of air pollution on firm performance (2020, background): “The critical role of employee human capital in corporate performance is also highlighted in various areas, including employee incentives (Chang et al., 2015), employee age (Ouimet and Zarutskie, 2014), tolerance for failure (Tian and Wang, 2014), and labor law and unionization (Acharya et al.”