The Relationship between Foreign Institutional Holding and Firm Capital Structure：Evidence from Taiwan

• Main Authors: Wan-Chen Chen, 陳婉甄
• Other Authors: Pei-Shih Weng
• Format: Others
• Published: 2014
• Online Access: http://ndltd.ncl.edu.tw/handle/k884pg

碩士 === 國立東華大學 === 財務金融學系 === 102 === The purpose of this paper is to examine the relation between different institutional holdings and firm capital structures in the Taiwan stock market, thereby exploring whether institutional holdings can affect capital structure decisions of the firms. The results show that among three institutional investors, foreign institutional holding can affect firm capital structure most. As the holding increases, the leverage ratio decreases. On the contrary, domestic institutional holdings are positively associated with capital structures of the firms, especially for the holding of Investment and Trust company. In the literature, there are only limited studies that analyze the relation between institutional holding and firm capital structure. Our study therefore provides further evidence and suggests that different institutional investors might prefer different firm risks represented by different leverage levels. Moreover, this paper helps for understanding how institutional investors can affect firm capital structure decisions through the market mechanism.