An Investigation of Structural Characteristics of Business Groups and Corporate Performance：Empirical Evidence from Taiwan
Date Issued
2005
Date
2005
Author(s)
Lin, Ruey-Ching
DOI
zh-TW
Abstract
The capital market in Taiwan has been growing rapidly. As a result, many large enterprises are developed. Some enterprises not only have a sizable scale themselves, but also go along with several subsidiaries, which are related to the parent company through business strategies and decision-making processes. Together, they formed the so-called “Business Groups”. In addition, along with the acceleration of globalization, the scale of business groups has been growing rapidly. In the long run, business groups will have an significant influence on the government’s annual revenue and the country’s overall development. Therefore, it is important to understand the structural characteristics that affect business groups’ performance.
The main purpose of our study is to explore the relationship between the business groups’ structural characteristics and the performance of their member firms. It is our understanding that our study is the first in its class to discuss the influence of structural characteristics of business groups on the performance of their member firms. Structural characteristics refer to structural characteristics of business ties and structural characteristics of corporate governance, while performance refers to accounting performance and capital market performance.
The major empirical results of our study are robust, from both the pooled fixed year effects regression and the separate-year regression estimation. Our findings indicate that vertical integration has a positive and significant impact on corporate performance. We also found that high stock collateral ratio from directors results in poor corporate performance. When the control rights of controlling stockholders are measured by the board control rights, the deviation of control rights from cash-flow rights has a positive and significant impact on corporate performance in all scenarios. However, if the control rights are measured by ownership control rights, the impact of the deviation is still positive, but its significance varies with scenarios. As for specialization, size of the board, and the dual role of chairman and general manager, we obtain mixed results about their impact on corporate performance
Subjects
結構特性
公司績效
業務聯結
公司治理
集團企業
business groups
structural characteristics
coporate performance
business ties
corporate governance
Type
other
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