Present study aims to provide empirical evidence on whether the broad-based profit sharing schemes bring about higher firms' efficiency which is sufficient to compensate the wealth transfer implicit in the schemes. We find that electronic firms that share portion of profit with employees perform less efficiently compared to their industry members. Among those profit sharing firms, payments in form of shares might cause the trouble. In addition, higher bonus payments give rise to less efficiency. From shareholders' perspective, current practice of sharing profits with employees is not a cost effective compensation scheme.