| Summary: | 碩士 === 逢甲大學 === 國際貿易所 === 95 === In this study, we examine the nonlinear relationship between investments in China and Taiwanese firm’s capital structures using panel threshold model during the period of 2000 to 2005 (annual data). Our results show that there is a positive relationship between investments in China and capital structures of firms investing in China as well as in developed countries due to the lower risk. And there is a negative relationship of firms investing in China as well as in developing countries due to the higher risk. There is a negative relationship between investments in China and capital structures at the initial phrase of investments in China for the full sample. And remaining sub-sample results are not significant. However, at the later stage, there is a positive relationship in firms investing in China as well as in both developed countries and developing countries. In addition, there is a lower debt ratio of the full sample. Our results are consistent with the up-stream and down-stream hypothesis of Kwok and Reeb (2000).
The electronic industries are found to have higher debt than the non-electronic industries. There is a flat relationship between investments in China and capital structures in the electronic industries. There is a negative relationship in the non-electronic industries at the initial phrase of investments in China. And at the later stage, it is changed to be not significant.
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