Since 2000 winter, America had exploded lots of business accounting scandals, how to fix the accounting principle became a broadly debated issue. Recently, American Financial Accounting Standard Board has determined that the employee stock options must be recorded as operating expense by the market value since 2005. However, if the employee stock bonus prevailing in Taiwan’s high-tech companies also must be expensed, then it would be a great impact on Taiwan’s high-tech stocks’ prices.
In this study, first, we try to use the financial statement data of Taiwan’s listing high-tech companies to understand the situation of executing employee stock bonus in those firms. Second, we utilize step-wise regression to extract the dominant variables affecting the return of the high-tech stocks in practice, and further to find out whether employee stock bonus imposes negative influence on stock price. When employee stock bonus ratio is a significant variable, we try to figure out the specific value of negative effect on rate of return. Finally, we take account of expense of employee stock bonus, then re-calculate the ten financial variables and rerun the step-wise regression. We want to know that the significance of employee stock bonus ratio would be persistent or not.
The empirical results show that the employee stock bonus is very popular in Taiwan’s high-tech firms. After expense of employee stock bonus, some firms’ profits even reverse to net loss. Moreover, in 2003, the IC design, the electronic components, and the electronic vender are the first three leading sub- electronic industries which most engage in executing the employee stock bonus. What surprise is the third rank of the electronic vender, because they usually don’t need as many research employees as other high-tech companies do. Furthermore, the outcome of step-wise regression shows that the employee stock bonus ratio is significant in three of the six years in both public and the counter market. It means the employee stock bonus ratio is a vital consideration when we evaluate the value of investment in Taiwan’s high-tech stocks. Even in the condition of expensing employee stock bonus, the employee stock bonus ratio is still significant in the adjusted regression model. In addition, by utilizing the coefficient of regression, we can calculate the value of the negative effect on rate of return resulting from expensing the employee stock bonus, and we find out the rate of return of total high-tech companies almost evaporates away.