Question & Answer: What is motivation behind Employee Stock Option? Is it that the accrual basis accounting is distorting the firm's liquidity and…..

Solution) Employes stock option provides the oppertunity for employess to get ownership right in the company they are already working. Salary , increment only act as the finanacial motivators for employes but having ownership right act as the non financial motivator the the employee. They feel the part of organisation as owners not only just employees working for salary. Non financial motivator such as share in company not only just boost up their moral but also give them the sense of security and motivate them to increase their productivity. By providing share to employees , also give them voting right in important decision of the company.