The Decision Behavior of Taiwan Firms Investing in China: Evidence from Different Industries
AbstractThe main purpose of this paper is to explore Taiwanese firms' risk behavior when investing in China. Firms' investment decision-making in relation to risk propensity may be affected by its (1) aspiration performance, (2) looming bankruptcy, (3) sound operating resource, and/or (4) investment behavior within an industry. There is no reason to believe that a consensus of risk behavior is shared among various industry sectors. Nevertheless, little empirical evidence exists on this issue in the academic world. Apart from risks associated with globalization, firms in Taiwan, unlike those of other nations, face very high political risk owing to the cross-strait political tension with China. Past researchers have taken variables such as innovation or R&D expenditure as proxies in testing the risk behavior of firms, and yet the reliability of these two variables to represent risk behavior remains arguable. The authors use China investment as the proxy for risk behavior of firms in Taiwan to study the decision-making behavior of two groups: One group in electronic and information technology (EIT) industry and another group in the nonelectronic and information technology (nonEIT) industry. Empirical results show that (1) China investment is significantly affected by peer investment; (2) the EIT firms are more aggressive in resource utilization; and (3) R&D expenditure has a significant positive relationship with China investments in Taiwanese firms with strong past performance.
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): 15 (2012)
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.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
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.