| Summary: | 碩士 === 台南應用科技大學 === 國際企業經營系碩士班 === 104 === In this study, we use spare debt capacity to measure the financial flexibility and then investigate the influence of financial flexibility on the company’s investment ability. The sample includes of 812 Taiwan listed firms for the periods 2001-2014. Then we test if firms with high levels of financial flexibility should be valued at a premium relative to less flexible firms. Finally, we test if good Corporate Governance is able to improve the company''s financial structure, and promote the upgrading of the company''s value.
Empirical result shows that companies which use spare debt capacity to maintain financial flexibility will increase its investment ability significantly. After adding the consideration of cash holdings, the financial flexibility still has significantly positive impact on company''s investment expenditure, showing the company''s financial flexibility will use the cash to maintain adequate level of financial flexibility and increase their investment spending
The study found that when two consecutive years of financial flexibility and low debt ratio companies, the rate of return is worse before reaching financial flexibility status. After achieving financial flexibility, their performance improved significantly. Finally, this study found that firms with more independent directors and supervisors and when the smaller board size, means firms with good corporate governance, are more likely to be the financial flexibility company.
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