The Effect of the Change of Compensation Plan on Firm Performance：A Study on the Effect of Expensing Employee Bonuses

• Main Authors: Meng-Huan Tzou, 鄒孟桓
• Other Authors: 陳俊合
• Format: Others
• Language: zh-TW
• Published: 2011
• Online Access: http://ndltd.ncl.edu.tw/handle/c94v6d

碩士 === 國立中興大學 === 會計學研究所 === 99 === In Taiwan, employee bonuses have been required to be recognized as expenses since January 1, 2008. Because the policy of expensing employee bonuses will reduce companies’ reported earnings, many enterprises started to change their compensation plan and grant less employee bonuses to employees. The purpose of this paper is to examine whether the change of compensation plan will affect future firm performance after expensing employee bonuses. This study expects that when companies reduce the employee bonuses or the distributed rate of stock bonuses, their future firm performance will also decrease. Furthermore, this study also expects that when companies pay more stock options to employees, their future firm performance will be greater. The empirical results indicated that when companies reduce employee bonuses, their future firm performance will also decrease. Employee bonuses still have incentive effect to firm performance after expensing employee bonuses, but this result is more significant when using operating performance as performance measure. Using stock return as performance measure, the incentive effect of employee bonuses is not obviously. Furthermore, this study also finds that when companies reduce their stock bonus ratio, future firm performance does not decrease significantly. The change of structure of employee bonuses does not have significant positive relationship with future firm performance. Finally, this study finds that the change of stock options have significant positive relationship only with operating performance. But using stock return as performance measure, the increases of stock options does not increase future firm performance.