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

•Comparing employees who are granted options with those who are only nominated, we find that the impact of option ownership on employees’ performance is insignificant.•Results are robust.•The incentive effect only exists for employees at high job levels. 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.