Payment Asymmetry of Employee Stock Bonus and Stock Dividends and Subsequent Firm Performance
Date Issued
2008
Date
2008
Author(s)
Huang, Yi-Hsuan
Abstract
It has been reported that minority shareholders are extremely upset that high-tech firms tend to pay employee bonus in the form of stocks and pay dividends in the form of cash. Managers usually believe that the asymmetric treatments can increase employees'' productivity and performance and can increase shareholder benefits in the long run. However, shareholders tend to believe that managers are exploiting shareholders’ benefits to increase their personal benefits.he main purpose of this essay is to investigate the minority shareholders’ perspective is reasonable or not.e first define whether employees have disproportionate stock bonus relative to shareholders. Payment asymmetry exists when a firm’s stock bonus ratio is greater than the industry median and its stock dividend payout ratio is less than the industry median. The objective of this essay is to examine the associations between subsequent firm performance and payment asymmetry in high tech companies in Taiwan. The evidences in high tech companies in Taiwan suggest that there is a negative association between payment asymmetry and subsequent firm performance.
Subjects
employees bonus
payment asymmetry
firm performance
incentive effect
entrenchment effect
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