ESOPs may not only effectively restrain the agent behavior of controlling shareholders by stimulating the supervision motivation of employees or attracting external governance mechanisms to form the synergy of internal and external governance, but also have limited effect due to its low shareholding ratio and agency problems among employees. Therefore, it’s an empirical question that whether the ESOPs can effectively inhibit the tunneling of controller. Based on the sample of A-share private listed companies in China from 2010 to 2019, this paper finds that ESOPs effectively curbs the tunneling behavior of controlling shareholders by exploiting a PSM+DID method, and the conclusion remains stable after a buttery of robust tests. Furthermore, the more obvious the inhibitory effect of ESOP on tunneling is when there are the stronger supervision motivation for employees (more employees hold shares and joint invest, have a performance committing and longer lock-up period), and more external information intermediaries entries (more media cover the enterprise). Further analyses also finds that the supporting measures (internal whistle-blowing system and minority shareholders' participation in voting at shareholders' meetings) that can stimulate employees' motivation and strengthen their supervision ability are more conducive to improving the inhibiting effect of ESOP on hollowing practices. The above conclusions not only reveal the prominent role of ESOPs on protecting minority shareholders, but also provide policy implications for listed companies to accelerate the implementation of ESOPs and improve the supporting system from other perspectives.