Determinants of share-based compensation (SBC) and the effect of SBC on firm performance: A comprehensive two-step analysis of companies in the Philippine stock exchange

Date of Publication

2011

Document Type

Bachelor's Thesis

Degree Name

Bachelor of Science in Accountancy

Subject Categories

Accounting

College

Ramon V. Del Rosario College of Business

Department/Unit

Accountancy

Thesis Adviser

Herminigilda E. Salendrez

Defense Panel Member

Rodiel C. Ferrer

Ma. Gina T. Manaligod

Abstract/Summary

Share-based compensation (SBC) is a growing trend worldwide for firms that seek to improve efficiency and employee morale. There have been limited studies on SBC in literature, particularly in the Philippines, where its effect on the firm's performance is uncertain and no consensus could be made. As companies become increasingly competitive, there is an opportunity to determine which firm - specific financial ratios influence the probability of a Philippine firm to implement SBC schemes, and whether these SBC schemes positively or negatively affect a Philippine firm's future performance. Findings may guide firm owners regarding their decision to further invest in SBC plans, or to begin using these plans. Using a dataset of 203 firms in the Philippines from 2005-2010, taken from the Philippine Stock Exchange, we employ binary logistics regression and panel data estimation to determine the factors that affect SBC use as well as the effect of SBC use on profitability. In general, we find that lagged ROE, market capitalization, and intangible assets ratio significantly determine the probability of SBC utilization, and firms that engage in SBC schemes post higher earnings per share figures than the average firm in the Philippines.

Abstract Format

html

Language

English

Format

Print

Accession Number

TU15985

Shelf Location

Archives, The Learning Commons, 12F, Henry Sy Sr. Hall

Physical Description

v, 150 leaves ; 28 cm. + ; 1 computer optical disc.

Keywords

Accounting--Standards; Employee stock options--Accounting--Standards; Compensation management--Philippines

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