Abstract
Abstract This study investigates whether a firm's past or future performance is related with the adoption of restricted stock grants. In addition, it also explores the relation between conditions of adopting restricted stock grants and firms' future performance. Empirical results show that there is no significant relationship between firms' past performance and the adoption of restricted stock grants. By contrast, improved future performance is found for companies adopting this compensation policy. Further, the incentive effect of restricted stock grants could be improved by extending the vesting service period, increasing the expenses amount of restricted stock grants, and decreasing the reduction in EPS. This article contributes to the serious lack of restricted stock grants literature in Taiwan. Also, it may offer some implications to companies considering the compensation scheme of restricted stock grants.
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