Corporate Governance And Product Market Power Evidence From Taiwan

• Main Authors: AINI FARMANIA, Aini Farmania
• Other Authors: CHEN, SHIEH-LIANG
• Format: Others
• Language: en_US
• Published: 2018
• Online Access: http://ndltd.ncl.edu.tw/handle/589332

博士 === 亞洲大學 === 經營管理學系 === 106 === Purpose – the purpose of this study is to investigate the effect of corporate governance on product market power in Taiwanese listed companies and also to exercise how corporate governance with cash holdings are effect on product market power. Design/methodology/approach – this study uses a quantitative approach through a pooled ordinary least square method to examine the effect corporate governance as independent variable to product market competition as dependent variable. This study use secondary data collection from Taiwan Economic Journal and Over-the-Counter from1996 to 2011. Research limitations – there are number of limitation associated with this study. First, regarding the firms’ ownership and control in Taiwan, the corporate governance is measured by coefficient of deviation (DEV1 and DEV4) and product market competition measure by price cost margin (EPCM). Second, this study will use control variables are following; leverage (LEV) and risk adverse (BETA), firms size (log of market value or LNMV), research and development expenditure (R&D), and performance (Return on Assets and Market Book Value). Third, this study uses a cash holding (CASH) and is defined as the log of cash and cash equivalent to total assets. Findings - first, better corporate governance leads to stronger product market power. Secondly, firms with higher research and development expenditure, return on assets and market to book value have stronger market power however large and high leveraged firms are weak in product market power. Last, cash holdings play an important role in deciding firms’ product market power. Companies with a high level of cash holding enjoy better product market power. Originality – this study provides better understanding about how important corporate governance for company therefore has a higher product market power. This study is also the first empirical studies showing how corporate governance affects on product market power. Practical implication – the findings of this study is practical direction for management and shareholders. For management it conducts to set of rules in transparency, accountability, responsibility, independency and fairness. For shareholders, it conducts to less control to professional management. Shareholders and management also needs to demonstrate good corporate citizenship through environmental awareness, ethical behavior and corporate governance practices.