Market Reaction to Announcements of Share-Based Payment

  • Grace M. Liao
  • Chilin Lu
  • Y. W. Chen


Taiwan’s Financial Accounting Standard does not align regulations with International Accounting Standards (IAS) in treatment of stock bonus paid to employees before 2008. IAS treats stock compensation as expense but Taiwan-listed companies recognized share-based compensation awards as allocation of retained earnings before 2008. To align with IAS, Taiwan’s SFAS No. 39 provides an accounting standard for employee stock bonuses by recognizing expenses to reflect the real value of the income statement and firm’s earnings. SFAS no. 39 will affect accounting earnings, and supposedly, the stock prices for listed firms in Taiwan. This paper examines market reactions to the announcement of SFAS no. 39. Our empirical results show that stock prices reacted significantly and negatively to announcement of SFAS No. 39 during the announcement period.

Key words

Share-based Payment Taiwan’s SFAS no.39 Abnormal Returns 

JEL Classification

G28 M48 


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Copyright information

© Japan Economic Policy Association (JEPA) 2009

Authors and Affiliations

  • Grace M. Liao
    • 1
  • Chilin Lu
    • 2
  • Y. W. Chen
    • 3
  1. 1.Department of Industrial Engineering and ManagementChung Jung Christian UniversityTaiwan
  2. 2.Department of Business AdministrationNational Formosa UniversityTaiwan
  3. 3.USA

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