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The causal effect of option ownership on employee performance: Empirical evidence from personnel data

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  • Li, Qiaoqiao
  • Zhang, Hong

Abstract

We use personnel data from a Chinese firm to explore the incentive effect of employee options on performance. To obtain the causal effect, the difference-in-differences method is used based upon a data set of employees nominated for option ownership. Comparing employees who were granted options with those who had only been nominated, we find that the impact of option ownership on employees’ performance is insignificant and results are robust across the board. Moreover, a heterogeneity analysis indicates that the incentive effect exists for employees at high job levels but remains insignificant for workers at low job levels; there is no difference in effect across genders or between high and low education; in addition, whether employees had plans to exercise their options has no impact on the incentive effect.

Suggested Citation

  • Li, Qiaoqiao & Zhang, Hong, 2021. "The causal effect of option ownership on employee performance: Empirical evidence from personnel data," Labour Economics, Elsevier, vol. 69(C).
    • Handle: RePEc:eee:labeco:v:69:y:2021:i:c:s0927537121000014
    DOI: 10.1016/j.labeco.2021.101966
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    Cited by:

    1. Dasilas, Apostolos, 2024. "The nonlinear relationship between employee stock ownership plans and firm performance: Evidence from China," Journal of Business Research, Elsevier, vol. 173(C).
    2. Dmytro Osiichuk, 2022. "The Driver of Workplace Alienation or the Cost of Effective Stewardship? The Consequences of Wage Gap for Corporate Performance," Sustainability, MDPI, vol. 14(13), pages 1-26, June.

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    More about this item

    Keywords

    Employee options; Incentive; DID; Internal labor market;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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