Since The Creative Assembly posted the XML to Napoleon and Empire: Total War today, I had a look. The files have explanations for what stuff actually means. The engine and mechanics are similar to Shogun 2. Oh happy days!
Morale Shock is something no one really knew. If a unit has 20% of its members casualties inside the timespan of 4 seconds (Shogun and Empire both have 20% as value, but it is not certain that Shogun 2's time span is 4 seconds too. Could be longer), they get morale shocked, which is a nasty morale penalty (making them more likely to rout etc).
How big the morale penalty is, I don't know. Could be the 'panic' penalty, which is enormous.
All units are as far as I know still affected by the 'recent casualties', which is having a % unit members killed within 4 seconds (not as much as 20% though).
Consequence: Samurai, Monks and Firebomb throwers, who are resistant to Morale Shocks, will not get this morale penalty since they are either resistant or immune to it. And we can induce morale shock in all the units not immune to it by killing 1/5th of their members in a short time. This makes a high Charge Bonus more useful, since it is the best way to kill many in shortest possible time. Also deliberately holding off some attacks so that an enemy unit can be hit hard from several directions etc at once could be wise, since casualties need to be inflicted very quickly for it to work.




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