A Study on Relationship between Financial Leverage Operation and Profitability in TFT-LCD Industry in Taiwan

• Main Authors: ＣＨＩＡ－ＹＩＮＧ ＣＨＥＮ, 陳嘉瑩
• Other Authors: 黃琮琪
• Format: Others
• Language: zh-TW
• Published: 2004
• Online Access: http://ndltd.ncl.edu.tw/handle/18427209958117319234

碩士 === 國立中興大學 === 應用經濟學研究所 === 92 === This study investigates the relationship between financial leverage operation and profitability in thin-film-transistor liquid crystal display, TFT-LCD, industry in Taiwan. TFT-LCD industries are recognized to be highly capital-concentrated and are still financing for building more plants, therefore operating financial leverage to increase profitability becomes an important issue for the industry. Therefore in this study we try to establish simultaneous model in finding the mutual effect between the financial leverage and the profitability. The empirical samples use cross-section and time series data, collected from quarter reports of five major manufacturers in the industry, dated from 2001-Q3 to 2004-Q1, and the firm structural data. Due to limitation that the characteristics of “profitability” and “financial leverage” affect each other, therefore this study uses moving average method in establishing a reasonable model in combination with Seemly Unrelated Regression method to verify the effects of these dependant variables. The result indicates that operating financial leverage to increase profitability is evident, this shows that the industry is in necessity to operate financial leverage to maintain their profitability; whereas the negative evident of the financial leverage to profitability relation shows that increase in long-term profitability can reduce the pressure of the manufacturer in operating the financial leverage.