Impact of Stock Abnormal Returns for Expense of Employee Stock Bonus – In the Example of Constituent in TSEC Taiwan Technology Index

• Main Authors: Winnie Chao, 趙輝儀
• Other Authors: Ming Shen Chen
• Format: Others
• Language: zh-TW
• Published: 2008
• Online Access: http://ndltd.ncl.edu.tw/handle/49709672477628590421

碩士 === 國立臺灣大學 === 財務金融學研究所 === 96 === In 1986, when reward system in Taiwan Information Technology (IT) industries was not sound, United Microelectronics Corporation (UMC) was the first to carry out the stock bonus system. The introduction of this system has attracted many outstanding talents from abroad and then help achieved the prosperity of Taiwan IT Industries nowadays. However, despite of its benefits for the development of Electronics industry, it has many shortcomings. Therefore, Taiwanese government has decided to implement policies of expensing employee stock bonus and taxing employee stock bonus based on 80% of its fair value in 2008. This decision motivates the research of this thesis. This thesis uses event study methodology to understand what investors’ reactions are as Financial Supervisory Commission executes expensing employee stock bonus on January 1, 2008. We select TSEC Taiwan Technology Index constituents to be samples, then we analyze by implementing the regression model. The cumulative abnormal returns is the dependent variable, and the expense of employee stock bonus ratio is the independent variable. Besides, we add companies’ capitalization and sales growth rate yearly to be the control variables. According to the outcome, we discovered that 15, 10 and 5 days before and after the event day, the sample companies’ prices have negative cumulative abnormal returns significantly. However, only the 5 days before and after the event day, the expense of employee stock bonus ratio is inversely related to the cumulative abnormal returns significantly. Therefore, we deduce that the expense of employee stock bonus ratio would produce the negative cumulative abnormal returns on the event day. The reason is that investors consider when the expense of employee stock bonus ratio is higher, stockholders revenue will be decreased, and then the stock price will also get down. However, this effect may be short term based on our evidence.