Rank-and-File Employee Stock Options and Workplace Safety

Yangyang CHEN*, Emmanuel OFOSU, Don O'SULLIVAN, Madhu VEERARAGHAVAN, Leon ZOLOTOY

*Corresponding author for this work

Research output: Journal PublicationsJournal Article (refereed)peer-review

Abstract

We provide robust evidence that rank-and-file employee stock options (R&F options) lead to lower work-related injury rates. This finding is consistent with the view that R&F options improve workplace safety by facilitating employee retention and cooperation. To establish causality, we employ difference-in-differences analysis around the passage of FAS 123R option expensing regulation and instrumental variable estimation. In cross-sectional analysis, we find that the documented effect is amplified among firms with higher labor mobility rates and among firms with greater scope for employee free riding. The results of supplemental analysis suggest that work-related injuries adversely impact firm performance and rule out reduced employee whistleblowing about workplace safety issues as an alternative mechanism driving our findings.
Original languageEnglish
JournalManagement Science
DOIs
Publication statusE-pub ahead of print - 21 Oct 2024

Keywords

  • rank0and0file employee stock options
  • workplace safety
  • work-related injury rates
  • employee retention
  • employee cooperation

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