Two Essays on the Simultaneous Equations Frameworks upon Financial Decisions

• Main Authors: Chia-Hui Lin, 林佳蕙
• Other Authors: Chu-Hsiung Lin
• Format: Others
• Language: zh-TW
• Published: 2013
• Online Access: http://ndltd.ncl.edu.tw/handle/24750207937298468324

博士 === 國立高雄第一科技大學 === 財務金融研究所 === 101 === This study contains two essays on the simultaneous equations frameworks upon hedging, investment and financial leverage and upon R&D investment, financial leverage and growth opportunities. Essay 1 establishes establishes simultaneous equations on hedging, investment and financial leverage in firms of different growth opportunities and sizes. Our overall aims are to explore the interactions between these decisions, and to determine whether such interactions are affected by growth opportunity and firm size. The data includes all TWSE 560 nonfinancial firms from 18 industries for the period from 2004 to 2010. The empirical analyses reveal that the higher growth opportunity and the smaller the firms are more likely to hedge to alleviate the underinvestment problem and are less likely to increase debt capacity by hedging. Second, it shows that the effect of financial leverage related to investment is significantly stronger for firms with high growth opportunities than those with low growth opportunities. Furthermore, the results find that the smaller the firm, the stronger the interactions between their hedging, investment and financial leverage. Essay 2 employs a simultaneous equation framework to reexamine the impacts of R&D investment and financial leverage on firms’ growth opportunities. We evidence the significant interactions among R&D investment, financial leverage and growth opportunities, indicating that a three-equation system is more consistent with the idea that the three variables are made at the same time and avoid false inferences due to the endogeneity problems. Second, the empirical findings show that the interaction effects between R&D investment and financial leverage, R&D investment and firm size, and R&D investment and industry concentration present significantly positive effects on growth opportunities. Third, the results find that firms with high R&D investment and low financial leverage can increase more the growth opportunities.