The law and accounting practice have treated employee bonus as part of the distribution of earnings rather than compensation expense for a long time in our country. This practice differs with those of the US and other countries. As modern accounting theory is concerned, wages paid monthly, year-end bonuses or stock bonuses should all regarded as the compensation for employees. This difference is widely concerned and discussed in the literature. To trace to its source, this paper explores the information content of employee bonus.
This study shows that the employee bonus has the information content and has a positive relationship with the cumulative abnormal return (CAR). Further, this study also shows that in the electronics industry, employee stock bonus is positively related with CAR while cash bonus is not significant; employee cash bonus is positively related with CAR while stock bonus is not significant in the non-electronics industry.
