Relationship Between Internationalization andCapital Structures: Evidence from Taiwanese Firms

• Main Authors: Sheng-Wei Chen, 陳聖偉
• Other Authors: none
• Format: Others
• Language: en_US
• Published: 2005
• Online Access: http://ndltd.ncl.edu.tw/handle/71395591299713710969

碩士 === 逢甲大學 === 國際貿易所 === 93 === Using a sample of Taiwanese listed firms over the 2001-2003 period, this study investigates the relationship between internationalization and a firm’s capital structure, measured by leverage ratios. In the univariate tests, our results demonstrate that multinational corporations are significantly less leveraged than domestic corporations. In addition, multinational corporations have lower business risks, lower foreign exchange risks, higher agency costs and more profitable than domestic corporations. Lower leverage ratio of MNCs may come from the facts that their high agency costs and high profitability dominate the effects of low business risks and low foreign exchange risks. In the multivariate models, our results show an U-shape relationship between internationalization and leverage ratio. That is, there exists an inflection point of the level of internationalization. Internationality is negatively associated with firms’ leverage ratios only before some threshold of internationality, and leverage ratios increase as the degree of internationalization increases beyond this threshold.