Impact of Firm Value, Company Performance, and Earning management for Expensing Employee Compensation：A Taiwan Experience

• Main Authors: Ko-wei Huang, 黃科瑋
• Other Authors: Yu-Chen Lin
• Format: Others
• Language: zh-TW
• Published: 2009
• Online Access: http://ndltd.ncl.edu.tw/handle/04104293975440241448

碩士 === 國立成功大學 === 會計學系碩博士班 === 97 === In Taiwan, employee bonus has been stated as expense instead of earnings distribution since January 1, 2008.This policy will affect companies that use employee compensation to motivate and retain employees. By practicing this policy, net income will reduce when expensing employee compensation. Besides, stock bonus is calculated by stock price before annual general shareholders' meeting under the new regulation. The new regulation leads to the decrease of employees’ actual income and compared to the calculation by par value, the purpose of employee compensation can't be reached The purpose of this study is to investigate the relationship among employee bonus, firm value, performance of companies, and earning management. Using the data from 2006 to 2008, the empirical results suggest that expensing employee bonus negatively effects stock price. This implies expensing signal makes investors know that employee bonus is expense instead of earnings distribution and reflects the actual firm value as well. Furthermore, our empirical findings also show that there is significantly positive relation between employee bonus and company performance. The results means positive incentive for employees still exists after expensing employee compensation. Lastly, the results also find that managers have more incentives to manage earnings in order to meet financial targets when employee bonus is recognized as expense and that the amount of earning management becomes larger.