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Employee Stock Bonus and Equity Valuation

Abstract
The accounting method about employee stock bonus has become popular issue recently. The most disputable problem is: whether employee stock bonus debts expense? Does the employee stock bonus expense measure by face value or market value? If employee stock bonus debts expense, technologic firms have negative affect on net income, even makes them unprofitable. Technologic firms worry about their stock price decreased by recording employee stock bonus expense, so they disagree with this accounting method.
To understand investors¡¦ reaction about recording employee stock bonus expense, I link the valuation on cooperate equity with accounting method of employee stock bonus by using Ohlson (1995) valuation model. The period of data is during 2001. I investigate the market¡¦s perception of the economic effect of employee stock bonus on firm value for a sample of 61 profitable technologic companies by using ¡§Retained Earning Method¡¨, ¡§Face Value Method¡¨ and ¡§Market Value Method¡¨ and observe investors how to value ¡§Employee Stock Bonus Expense¡¨.
My results suggest that if technologic firms debt employee stock bonus expense by using ¡§Market Value Method¡¨, market has the highest valuation on firms¡¦ value. In addition, the market appears to value these firms¡¦ ¡§Employee Stock Bonus Expense¡¨ not as an expense but as an intangible asset.
Key Words: Employee Stock Bonus, equity valuation, Ohlson Model

Identiferoai:union.ndltd.org:NSYSU/oai:NSYSU:etd-0622103-231130
Date22 June 2003
CreatorsKuo, Tzu-hui
ContributorsMiao-Ling Chen, Feng-Yu Ni, Henry Y. Lo, Y. Chris Liao
PublisherNSYSU
Source SetsNSYSU Electronic Thesis and Dissertation Archive
LanguageCholon
Detected LanguageEnglish
Typetext
Formatapplication/pdf
Sourcehttp://etd.lib.nsysu.edu.tw/ETD-db/ETD-search/view_etd?URN=etd-0622103-231130
Rightswithheld, Copyright information available at source archive

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