The Impact of Financial Flexibility and Macroeconomic Conditions on Capital Structure before and after Tax Integration: Evidence from the Electronic Industries of Taiwan

in International Symposium (oral presentation paper), 國際研討會(全文口頭發表)
標題The Impact of Financial Flexibility and Macroeconomic Conditions on Capital Structure before and after Tax Integration: Evidence from the Electronic Industries of Taiwan
出版類型國際研討會(全文口頭發表)
出版年度2007
AuthorsHsien-Hung Yeh, 葉憲弘, & Wen-Ying Cheng E. R.
出版日期Jul 2 2007 12:0
其他編號0000
中文摘要

We empirically apply the partial adjustment model of capital structure and also allow for structural break arising from a change in tax policy to test the significance of macroeconomic conditions and "financial flexibility" in addition to firm-level factors in determining capital structure based on the data from the electronic industries in Taiwan. The results show that macroeconomic conditions, financial flexibility and interactions between firm-level variables and macroeconomic conditions - largely ignored by prior studies, significantly affect capital structure. The results also show that their interaction impact on capital structure varies with the tax policy change. Besides, we confirm the significant role of firm-level factors in the determination of capital structure but their effect is unaffected by the tax policy change. Moreover, neither the agency models nor the asymmetric information models could fully explain the results in this paper, which seems consistent with the statement of Myers that there's no perfect theory of capital structure and no reason to expect one.

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