| Summary: | 碩士 === 朝陽科技大學 === 會計所 === 96 === Although the sale growth plays the important role on the business management and the agency theory, there is no empirical research that examines the factors of sales growth influencing firm performance in Taiwan. The aim of this paper is to connect free cash flow hypothesis of agency theory and internal governance mechanisms and to study the relationship between sales growth and firm performance.
We find that there is a double threshold effect between free cash flow (FCF) and firm performance, which are 28.51% and 34.40%. These results indicate that firm with too high FCF may induce management to pursue an ‘empire building’ strategy or to over invest. There is only single threshold effect between inside ownership and firm performance, which is 39.74% in consistency with the entrenchment hypothesis. There is only single threshold effect between sale growth and firm performance, which is 113.36%, the higher sale growth the better firm performance. However, the sale growth stops at a certain level. There is a triple threshold effect among sale growth and firm performance, which are 18.48%, 22.99%, and 34.40%. The FCF may promote the positive relationship between sale growth and firm performance, but it becomes slow. The inside ownership used as a threshold variable, there is a triple threshold effect among sale growth and firm performance, which are 26.34%, 28.09%, and 45.25%. Except inside ownership between 26.34% and 28.09%, the negative relationship exists between sale growth and firm performance. These results indicate that weaker internal government mechanism, agency cost and supervising cost will increase and the firm performance will decrease.
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