| Summary: | 碩士 === 中國文化大學 === 會計研究所 === 97 === Taiwanese government amended business accounting law §64 in May, 2006 and required that firms may not expense their distribution of retained earnings. This new requirement, implemented in 2008, is consistent with current international financial reporting standards, which require that employee bonus shall be expensed when occurred. There is no final conclusion concerning whether expensing employee bonus affects firms’ operation performance. Therefore, research questions emerged from the trend are that can expensing employee bonus influence firms’ operation performance? that can firms decrease their debt ratios and obtain benefits by generating non-debt tax shields from expensing employee bonus? and that will employee bonus plans only affect electronic industry as usual after the implement of expensing employee bonus?
Our empirical results show that expensing employee bonus is significantly and negatively related to firms’ operation performance from both financial dimension and nonfinancial dimension. In addition, companies can indeed improve their debt ratios through non-debt tax shield generated by firms’ expensing employee bonus. Finally, comparing to other industries, we find that expensing employee bonus has the most influence upon electronic industry. Such an influence includes the effect on earnings per share and employee turnover ratios.
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