Title: Determinant and incentive effect of employee stock bonus policy: evidence from Taiwan

Authors: Chia-Hui Chen, Lyuh-Yi Lin

Addresses: Department of Accounting, College of Management, Providence University, 200 Chungchi Road, Shalu, Taichung 433, Taiwan. ' Department of Accounting, College of Management, Providence University, 200 Chungchi Road, Shalu, Taichung 433, Taiwan

Abstract: Comparing 341 public companies that did not implement employee stock bonus policies with 317 that did during the period from 1989 to 2006, the study identifies that the factors significantly influencing decisions on the percentage of after-tax surplus profits to be distributed as employee stock bonuses include managerial ownership, independent directorship, operational risk, firm size, growth opportunity, and industry characteristics. A non-linear relationship between this decision on the percentage of after-tax surplus profits to be distributed as employee stock bonuses and agency cost was found. The results contradict previous findings indicating weak incentive effect of implementing employee stock bonus policy.

Keywords: employee stock bonuses; after-tax surplus profits; agency costs; incentive effects; Taiwan; bonus policy.

DOI: 10.1504/IJAF.2008.020300

International Journal of Accounting and Finance, 2008 Vol.1 No.2, pp.121 - 148

Published online: 15 Sep 2008 *

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