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Capital Structure, Working Capital, and Governance Quality Affect the Financial Performance of Small and Medium Enterprises in Taiwan

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  • Anh-Huyen Vu Thi

    (Academy of Policy and Development, Hanoi 100000, Vietnam)

  • The-Dong Phung

    (National Financial Supervisory Commission, Hanoi 100000, Vietnam)

Abstract

This study examines the impact of capital structure, working capital, and governance quality on the financial performance of small- and medium-sized enterprises in Taiwan using a sample of more than 2000 firms from the Taiwan Economic Journal (TEJ) during the 24-year period of 1995–2018. Panel data are used to create statistics for the regression model. The result shows that a firm’s capital structure, represented by the debt ratio, has a significantly negative impact on the firm’s financial measures (return on assets (ROA) and return on equity (ROE)), where the working capital, represented by the cash conversion cycle (CCC), has a negative impact and governance quality, represented by the board size, cash dividend distribution, and the percentage of directors, has different impacts.

Suggested Citation

  • Anh-Huyen Vu Thi & The-Dong Phung, 2021. "Capital Structure, Working Capital, and Governance Quality Affect the Financial Performance of Small and Medium Enterprises in Taiwan," JRFM, MDPI, vol. 14(8), pages 1-13, August.
    • Handle: RePEc:gam:jjrfmx:v:14:y:2021:i:8:p:381-:d:615892
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    References listed on IDEAS

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