The effect of expense treatment for employee bonus on the distribution of director compensation and employee bonus and corporate performance

• Main Authors: Chen, Tzu Yu, 陳姿諭
• Other Authors: Chen, Jin Feng
• Format: Others
• Language: zh-TW
• Published: 2011
• Online Access: http://ndltd.ncl.edu.tw/handle/46719641805796549280

碩士 === 國立政治大學 === 會計研究所 === 99 === The success of corporate operations relies on the efforts of all people in the firm. By distributing compensation and bonus which are based on corporate performance, it not only can enhance directors’ and employees’ work motivation, but also achieve the purpose of better corporate performance. The accounting treatment for director compensation or employee bonus used to be recognized as a part of corporate earnings distribution, not as an expense. This method was, however, criticized for its failure to present the true operating results of a company. In order to solve this problem and in accordance with the IFRS treatment, the government amended the related laws and required that both director compensation and employee bonus be recognized as salary expense after January 1, 2008. The purpose of this study is to investigate the changes in director compensation and employee bonus after the above new regulation took effect. This study also examines whether this change alters the incentives to directors and employees. The empirical results show that after the new accounting treatment, no significant changes in the percentage of director compensation to net income. When it comes to employee bonus, the percentage of cash bonus increased, but the stock bonus declined. In addition, employee cash and stock bonus, no matter being treated as an expense or not, did help the firms to enhance performance. However, cash bonus’ motivation effect became lesser, whereas stock bonus’ effect increased. Furthermore, cash bonus was more effective than stock bonus in improving corporate performance before and after the expense treatment for employee bonus.