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Degree of Internationalization, Financial Structure and Cost of Capital: Evidence from Emerging Taiwan

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  • Ta-Cheng Chang
  • John Darcy
  • Yu-Ting Hou
  • Yun-Chia Yan

Abstract

The debt structure of companies in Developing and Emerging Economies (DEEs) is significantly different from that of companies in the developed countries. This study examines the effect of degree of internationalization (DOI) on leverage ratio (LEV) and cost of capital (COC) in DEE setting by using a sample of Taiwan listed companies. Our results show that DOI has a significant positive impact on short-term debt as well as a significant negative impact on long-term debt. Therefore, it appears that DOI has a substitution effect in DEE companies. In summary, our results indicate that DEE firms do not have the advantage of participating in the international financial market. Â

Suggested Citation

  • Ta-Cheng Chang & John Darcy & Yu-Ting Hou & Yun-Chia Yan, 2022. "Degree of Internationalization, Financial Structure and Cost of Capital: Evidence from Emerging Taiwan," Accounting and Finance Research, Sciedu Press, vol. 11(4), pages 1-23, November.
    • Handle: RePEc:jfr:afr111:v:11:y:2022:i:4:p:23
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    References listed on IDEAS

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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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