Financial Structure, Corporate Finance and Growth of Taiwan's Manufacturing Firms
AbstractThe purpose of this paper is to examine the determinants of Taiwan's manufacturing firm growth, in particular, the effects of financial structure, corporate financing choices and Taiwanese outward FDI in China on firm growth in different industries besides other physical factors discussed in the literature. We construct an unbalanced dynamic panel data using 280 listed and OTC manufacturing firms over the period 1991–2002. The empirical method utilized is the generalized method of moments (GMM) proposed by Arellano and Bond (1991). Our results find that (1) the growth rates of firms are positively related to firm size, age, capital intensity, lagged R&D, export ratio, investment ratio, and profits; (2) high debt-to-equity ratio is associated with low corporation growth, while high return on total assets is associated with high corporation growth, which reflects that a firm with a relatively sound financial structure will facilitate their growth; (3) higher liquidity of stock market relative to the banking sector lead to higher growth of firms. However, larger size of stock market relative to the banking sector leads to lower the firm's growth, i.e., the smaller the indirect finance, the lower the firm growth; (4) firms engaged in FDI toward China might be hollowing-out; (5) individual firms that could be financed more from either bank or equity market will enjoy higher rates of growth compared to others in the same industries, but, those effects on traditional and basic industries are weaker; (6) high bank-financing ratio and internal financing are associated with higher firm growth, while firms using more bonds or equity financing tend to experience lower growth. However, the net positive effects of equity financing on traditional and basic firm growth are significantly greater.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by World Scientific Publishing Co. Pte. Ltd. in its journal Review of Pacific Basin Financial Markets and Policies.
Volume (Year): 09 (2006)
Issue (Month): 01 ()
Contact details of provider:
Web page: http://www.worldscinet.com/rpbfmp/rpbfmp.shtml
Find related papers by JEL classification:
- G1 - Financial Economics - - General Financial Markets
- G2 - Financial Economics - - Financial Institutions and Services
- G3 - Financial Economics - - Corporate Finance and Governance
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Antje Schimke, 2011. "Factors Affecting the Growth of Manufacturing Firms â€šÃ„Ã¬ Analysis of Growth Stages: A Case of German Firms," ERSA conference papers ersa10p1386, European Regional Science Association.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tai Tone Lim).
If references are entirely missing, you can add them using this form.