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|Other Titles:||The Relationship of Financing Policies and Economic Value Added in Taiwan Semiconductor Industry|
Tseng, Jau-ling;Cho, Chia-Chen
Economic value added(EVA);Financing policies, Semiconductor industry;Two-stage instrumental variables analysis
|Issue Date:||2016-06-01 14:14:52 (UTC+8)|
Since companies’ financing policies and economic value added (EVA) are simultaneously determined, this study attempts to examine the relationship of economic value added and financing policies in Taiwan semiconductor industry by incorporating not only one financing instrument, but also various combinations of four diverse financing instruments, such as internal retained earnings, bank loans, corporate bonds, and seasoned equity offerings. The panel data of 47 listed and OTC-listed Taiwan semiconductor companies for the period of 1991-2001 are collected, and the Two Stage Instrumental Variables Analysis technique is then applied. The empirical results are summarized as follows. The company’s retained earnings and bank loans have significantly positive effects on EVA, but corporate bonds have insignificantly positive effects on EVA. In addition, seasoned equity offerings have significantly negative effects on EVA. These relationships are with robustness across diverse combinations of financing instruments, and are in line with the propositions of research hypotheses. The scale contributing to EVA of four financing instruments is ordered as internal earnings, bank loans, corporate bonds (insignificantly positive), and then seasoned equity offerings (negative).
International Journal of Accounting Studies
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