Effects of Capital Utilization and Industry Difference on FDI Performance: Taiwanese Firms in Mainland China, Singapore, Malaysia, and Thailand

Abstract

In recent years, the deterioration of the investment environment in Taiwan has forced local industries to move abroad. Enterprises from Taiwan that invest in mainland China or Southeast Asian countries take advantage, as do their counterparts from other countries, of lower labor and land costs in order to enter the tremendous local markets and eventually help improve the economic conditions of these host countries.\nFirms investing in foreign countries face capital and production migration problems. In this paper we apply objective information about foreign direct investment (FDI) found in financial statements to explore the effects of capital and industry when Taiwanese firms invest in mainland China or Southeast Asian countries. This empirical study investigates the financial performance of these firms from the viewpoints of capital utilization, industrial difference, and the macroeconomic environment.