Against the backdrop of accelerating the socialist modernization in China, innovation in enterprises is a key variable in promoting the transformation of China's economic development. Employee stock ownership plans have a significant role in promoting enterprise innovation. However, due to the slow return on real investment and low return rate, enterprise managers have over-invested idle funds in the financial industry, which has crowded out innovation resources and caused the phenomenon of enterprises moving from the real to the virtual. As a part of internal fund management, the role of financial asset allocation in the innovation effect of employee stock ownership plans deserves further exploration. This article selects A-share listed companies from the year of 2014 to the year of 2021 as the research sample, and empirically studies the relationship between employee stock ownership plans, corporate financialization, and enterprise innovation, using corporate financialization as the mediating variable. The research results showed that the implementation of employee stock ownership plans can promote enterprise innovation; the implementation of employee stock ownership plans can inhibit corporate financialization and thus promote enterprise innovation. Further research found that the innovation incentive effect of employee stock ownership plans is more significant in non-state-owned enterprises.