IMPACT OF EMPLOYEE STOCK OPTIONS ON FIRM PERFORMANCE

Abstract

Employee stock option is the worldwide phenomena now. The popularity of broad based employee stock option plans in India has increased only in 2000 due to the escalation in the Indian Industry. Worldwide, stock options are used to create a sense of ownership among the employees, to share the growth of the company, create long term wealth in the hands of the employees and provide performance linked rewards to the employees ESOPs are seen as an important human resource tool, the rationale behind ESOPs is that they will help companies to retain staff, attract talent, motivate employees and enable them to share the long term growth of the companies as well as the shareholders. The present paper makes an empirical study on the sample of 59 software companies listed in Indian stock market which has adopted employee stock option plan and analyze its impact on firm performance.