Do non-executive employee equity incentives reduce stock price crash risk?

This paper focused on the role of non-executive employees, and examined the impact of nonexecutive employee equity incentives on stock price crash risk. We find that equity incentives plan can reduce the stock price crash risk, but this role is played by non-executive employee equity incentives. The mechanism analysis suggests that non-executive employee equity incentives mitigate stock price crash risk in two ways: Increasing the informativeness of stock price, and reducing the operational risk of firms. Our findings provide empirical evidence for relevant policies, such as regulating the information disclosure of listed firms and maintaining the stability of the stock market. © 2020, Editorial Board of Journal of Systems Engineering Society of China. All right reserved.