The Impact of Employee Stock Option Adoption and Incidence on Productivity: Evidence from U.S. Panel Data




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    •  The authors’ affiliations are, respectively, City University of Hong Kong, Department of Management, Kowloon Tong, Hong Kong. E-mail:; Texas A&M University-Kingsville, Department of Economics and Finance, Kingsville, TX. E-mail: We are grateful to Doug Kruse, Steven Director, and Panu Kalmi for their comments and suggestions. We thank Corey Rosen of the National Center for Employee Ownership (NCEO) and their partners for access to survey data. Grant funding from the Society of Human Resource Management Foundation, the Center for Human Resource Strategy at Rutgers University, and the Fulbright Scholars Program is gratefully acknowledged. We also thank Brandt P. Kelly, Ching-Bin Lin, Rhokuen Park, and Ethan Tsai for their research assistance. In addition, James Sesil thanks colleagues and staff at City University of Hong Kong, the Consulate General of the United States Hong Kong and Macau and the organizing body for the Fulbright Scholars Program, the Council for International Exchange of Scholars (CIES).


This paper examines the productivity effect of broad-based and executive stock option programs in adoption year and five subsequent years. The findings include a positive impact on productivity, which is maintained over a five-year period after adoption for executive plans but diminishes immediately for broad-based plans. We interpret these findings as evidence of stock option usage being of benefit to organizations. However, to sustain the impact of broad-based plans options, grants may need to be made with the same frequency as executive option grants.