Employee Stock Bonus, R&D Expenditures and Firm Performance: Evidence from Taiwan’s Information-Technology Industry

• Main Authors: Hsiang-Lan Chen, 陳香蘭
• Other Authors: Yen-Sheng Huang
• Format: Others
• Language: en_US
• Online Access: http://ndltd.ncl.edu.tw/handle/axjcm8

博士 === 國立臺灣科技大學 === 企業管理系 === 94 === The three objectives in this paper are (1) to clarify whether employee stock bonus could enhance or hamper firm performance, (2) to examine the stock bonus effect on corporate decision regarding R&D expenditures, and (3) to investigate whether R&D expenditures strengthen or weaken the relationship between stock bonus and firm performance. Using a sample of Taiwan listed information-technology firms over the sample period 1996-2001, the empirical results document a positive association between employee stock bonus and firm performance. Additionally, it is evident that R&D expenditures are positive and significant related to employee stock bonus. Moreover, the interaction of stock bonus and R&D expenditures is significantly positive. The evidences are consistent with the argument that employee stock bonus is an interest-alignment mechanism for enhancing firm performance. Employee stock bonus could (1) promote managers to take risky R&D projects that may maximize shareholder wealth; and (2) motivate employees to work hard in innovative activities, and to share their private knowledge and solve problems voluntarily. As R&D risks decreases and the likelihood of R&D success increases, firms are more likely to make sizable R&D investments that further lead to enhanced firm performance.