The mandatory Disclosure Effects on the Incentive and Dilution effect of employee stock bonus.

• Main Authors: Chang, Wen-Chen, 張文珍
• Other Authors: Fan, Hung-Shu
• Format: Others
• Language: zh-TW
• Published: 2006
• Online Access: http://ndltd.ncl.edu.tw/handle/36187856833935453336

碩士 === 輔仁大學 === 會計學系碩士班 === 94 === So far, based on Taiwan's regulation, the employee bonus is still treated as an item of after-tax-earnings distribution rather than an expense of a firm. The Taiwan Securities and Futures Commission promulgated a new order on January 30, 2003 which required public companies to disclose pro forma EPS deducted by employee bonus and director/supervisor compensation rather than to recognize employee bonus and director/supervisor compensation as a firm expense in 2002 (and later) annual reports. Could such an expedient regulation make investors realize that the employee bonus is an expense that should be formally recognized in firm's financial statements? The purpose of this study is to examine the transition of the incentive and dilution effect of employee stock bonus before and after this mandatory disclosure. The empirical results are generally consistent with the expectations and summarized as follows. (1) The interactive variable of employee stock bonus (measured at par value or market value) and IOS (investment opportunities, the proxy variable for the incentive effect) is significantly positive-related to stock price (at December 31 or at April 30 of next calendar year), but the interactive variable of employee stock bonus、IOS and the dummy for the years of carrying out the new order is significantly negative-related to stock price. It evidences the incentive effect of employee stock bonus is lower than before. (2) Under controlling the incentive effect (proxied by IOS), employee stock bonus(measured at par value or market value) is significantly positive-related to stock price, but the interactive variable of employee stock bonus and the dummy for the years of carrying out the new order is significantly negative-related to stock price. It evidences that the dilution effect of employee stock bonus becomes stronger than before.