| Summary: | 碩士 === 國立交通大學 === 管理學院碩士在職專班管理科學組 === 95 === In this thesis, we undertake a study on the relationship between corporation’s disclosure quality and their financial performance. Main sources of data include the public disclosure evaluation conducted by the Securities and Futures Institute during 2003~2005, as well as annual reports published by publicly listed Taiwanese companies. The quantitative methods, OLS (Ordinary Least Square Approach) and 2SLS (Two Stage Least Square Approach), were adopted to uncover the correlations and to reduce Homoskedasticity problems. The empirical results show that there is a consequential positive correlation between credit risk and disclosure quality. The quality of disclosure is also positively correlated with size of foreign institutional shareholding, and negatively correlated with the presence of large domestic shareholders. Further, there is indeed a positive correlation between disclosure quality and financial performance, inline with our research hypothesis. Other ancillary findings show that R&D expenditure is positively correlated with financial performance, whilst sizable government holding is a negative factor for performance. Size of holding by the senior management team also turns out to be a negative performance factor, we believe, due to the Mutual Back Scratching Effect that impairs management effectiveness. Board of Directors compensation showed a positive factor for performance. This indicates that higher compensation has encouraged board members to get more involved in monitoring and guiding the company’s developments. The presence of Independent Directors proved a further positive factor for performance. This result also shows that the Cronyism Effect commonly witnessed in the U.S. capital markets is not currently demonstrated in Taiwan.
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