| Summary: | 碩士 === 東海大學 === 管理碩士學程在職進修專班 === 93 === Abstract
The research explores the effect of internationalization on financial performance of Taiwan’s Integrated Circuit (IC) industry during the period of 1998 to 2003. We first construct an internationalization index by applying the principal component analysis to export ratio, overseas branches, and overseas assets ratio. We then apply the factor analysis to classify fourteen variables into four categories as the measures of financial performance. Finally, the iterated seemingly unrelated regression is applied to examine the relationship between internationalization and financial performance of sample firms (Model I). In addition, we use export ratio, overseas branches, and overseas asset ratio as independent variables, and return on assets, net worth, current ratio, and asset growth rate, which have the highest factor loadings from the above four categories, as dependents variables to examine the impact of internationalization on financial performance (Model II).
The results find that, in addition to the increase in the number of foreign direct investments, the internationalization of Taiwan’s IC industry is export-oriented, and has a U-shaped (Model I) or S-shaped impact (Model II) on their financial performance. In other words, during the early stage of internationalization, Taiwan’s IC industry experienced the challenge from liabilities of foreignness. Following the accumulation of internationalization experiences, the sample firms demonstrated a positive relationship between internationalization and financial performance. However, once the degree of internationalization is over its optimal level, the financial performance will decline because of the burden of higher operation costs. Furthermore, we also find that insider ownership has a significantly negative impact on financial performance, which confirms the entrenchment hypothesis. This finding suggests that Taiwan’s IC industry should reinforce corporate governance.
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