Foreign direct investment, corporate governance, and firm performance

• Main Authors: Yen-lin Tsai, 蔡嚴麟
• Other Authors: Yin-Hua Yie
• Format: Others
• Language: zh-TW
• Published: 2004
• Online Access: http://ndltd.ncl.edu.tw/handle/18959098460395206061

碩士 === 輔仁大學 === 金融研究所 === 92 === This paper examines the relation among foreign direct investment, corporate governance, and firm performance. This study not only examines the influence of corporate governance on the profitability of companies which involve foreign direct investments but also investigates whether corporate governance could prevent information asymmetry and agent problems to protect the minority stockholders’ wealth from being expropriated by the majority stockholders. This paper finds out that corporate governance will influence on the short-term and long-term performance of foreign physical investments, contrasted to foreign financial investments. Moreover, the results suggest that although international diversified investment is an inevitable strategy for Taiwan’s enterprises, especially for companies with traditional core business, the companies without good corporate governance could not be trusted by the public, as explained by the negative change of the short-term cumulative abnormal returns. In addition, the lack of the good corporate governance would impact on companies’ long- term profitability and performance.