| Summary: | 碩士 === 逢甲大學 === 國際貿易所 === 94 === In recent years, the investment in China from Taiwanese business is more and more popular. In order to explore the relationship between the degree of investment in China and a firm’s performance, this study mainly discusses two important issues.
（1）Is more investment in China better for Taiwanese firms?
（2）What is the relationship between the degree of investment in China and a firm’s performance？
The sample periods are from the first quarter in 2000 to the forth quarter in 2005. The sample contains 191 listed companies investing in China. Three methods are used to investigate the possible non-linear relationship between the investment in China and a firm’s performance:
Curvilinear Regression Model, Piecewise Linear Regression Model, and Panel Threshold Regression Model.
The three models almost exhibit the same results of the performance of Taiwanese FDIs in China—a negative relationship. It is not the result as expected that Taiwanes business would gain higher performance due to China’s low wages and abundant natural resource. The low performance may be, to some extent, due to the fact that there is a limitation of the degree of investing in China of listed firms can not larger than 40 % of their net values. This regulation may seriously influence the arrangement of firms in China. Hence, our results suggest that the regulators should reconsider the possible influence of the limitation to the listed firms in China. As for the firms investing in China, however, they can refer to our research results before they make decisions to invest in China. In addition, they can consider to invest in other markets, such as other Southeast Asia as well as Central and East Europe.
As for the control variables, the leverage ratio exhibits a significantly negative relationship with a firm’s performance. The electronic industries are found to have higher performance than the non-electronic industries. However, the relationship between firm sizes and firms’ performance are inconsistent.
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