Internationalization and equity agency costs :evndence from Taiwaness firms

• Main Authors: Chun-Lein Ko, 柯春蓮
• Other Authors: Yi-Chein Chiang
• Format: Others
• Language: zh-TW
• Online Access: http://ndltd.ncl.edu.tw/handle/bz88pz

碩士 === 逢甲大學 === 國際貿易所 === 94 === The disadvantages in Taiwan are scarcity of raw materials and small market scales. The advantages in Taiwan are labors with high education and creative power. Many Taiwanese firms operate abroad to increase the competitive abilities. However, it is difficult to get the information and monitor the managers of foreign subsidiaries. Hence, it is prone to increase the equity agency costs. Using data from Taiwanese listed firms issuing bonds and stocks from the period 2000 to 2004, this study investigates the relationship between internationalization and equity agency costs. Our results show that capital market reactions to equity offering announcements are more negative than those of debt offering announcements. In addition, the capital market reactions to security offerings of MNCs are more negative than those of domestic firms. In investors’ views, firms with foreign operations have larger equity agency costs than the domestic firms. The larger the foreign operations, the larger the equity agency costs. It means that investors worry very much about the difficulty to monitor the foreign operations of MNCs. This study suggests MNCs to increase the information transparency of firms. Then, the information asymmetry reduces and investors may be more desirable to buy stocks or bonds, and a firm’s costs of capital may decrease.