Executive equity incentives and corporate digital transformation

•Executive equity incentives can promote corporate digital transformation.•The effect is stronger for stock options than restricted stocks.•Longer exercise periods enhance the impact of equity incentives.•Lenient performance conditions boost the effectiveness of equity incentives.•Our findings provide insights into promoting corporate digital transformation. Based on a sample of Chinese A-share listed companies from 2005 to 2021, we explore the impact of executive equity incentives on corporate digital transformation. We find that executive equity incentives promote corporate digital transformation, and this effect is more salient for equity incentives granted in the form of stock options than restricted stocks, with a longer exercise period, and more lenient exercise performance conditions. Our findings enrich the research on the economic consequences of executive equity incentives and provide insights for promoting corporate digital transformation.