Internationalization and Capital Structure of Taiwan Electronic Corporations

Abstract

This paper analyzes capital structure between the internationalized and domestic electronic industries in Taiwan from 1999 to 2008 as the reference for financing strategies and decision. The evidence shows that the leverage and the payout cash dividend ratio in the internationalized electronic firms are lower than those in domestic electronic firms. Due to the uniqueness and the high profit ability of the internationalized electronic firms in the Taiwan, they have more earnings and inside capital so that the leverage is lower. On the contrary, the internationalization level is irrelevant with the payout cash dividend ratio due to the payout cash dividend depending on the dividend balance policy regulated by government in Taiwan.

Internationalization and Capital Structure: Evidence from Malaysian Manufacturing Firms

“…The findings are consistent with the studies done by Burgman (1996), Low and Chen (2004), Aggarwal and Kyaw (2010) and Lin and Hung (2012). Burgman (1996) and Low and Chen (2004) investigated and revealed that the negative relationship between internationalization and debt ratio is mainly attributed to US firms.…”

“…Thus, leverage of these firms would decrease. It is supported by the studies by Aggarwal and Kyaw (2010) and Lin and Hung (2012) as their research results indicated that internationalized firms generate greater profitability and have lower debt ratio compared to domestic firms. The inverse relationship between internationalization and debt ratio is also consistent with the implications of agency theory.…”

“…They indicate that international diversification helps firms reduce their risk and level of debt and increase their payout. Similarly, in confirming Aggarwal and Kyaw (2010) Lin and Hung (2012) compared the capital structure of electronic firms for domestic as well as international firms in Taiwan for 10 years. They found those leverage and dividend payouts are negatively related for international firms while the opposite is true for domestic firms.…”

The Effect of International Trading Activities of Firms on Their Financial Structure

“…Regarding studies of the relationship between multinational and local companies' debt structure; Hughes, Logue, and Sweeney (1975), Shapiro (1978), Lee and Kwok (1988), Burgman (1996), Kwok and Reeb (2000), and Lin and Hung (2012) indicate that the borrowing rate of multinational companies is lower than that of domestic companies. Greenaway, Guariglia and Kneller (2007) states that the debt ratio of exporting firms is less than that of non-exporting firms.…”

The Determinants of Capital Structure on Property and Real Estate Company Period 2012-2016

“…This means Companies that have high asset growth will tend to use more debt; this is because companies with a high growth rate of the capital need relatively large, so the company will rely on the use of external funds in the form of debt. According to Lin and Hung (2012), the company that wants great growth opportunities requires considerable funding for expansion cannot rely on internal funds are limited, so the company can borrow funds from external parties to fund the company's activities. This is consistent with the pecking order theory; companies will prioritize the use of internal funds first, if not sufficient it will take the form of debt financing sources to issue shares.…”