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[摘要] :
Foreign direct investment (FDI) has become highly popular in recent decades. This study investigates how FDI by Taiwanese firms affects default risk. The results indicate the default risk does not change for FDI in China but increases in non-China areas. The FDIs in non-China areas are primarily in tax haven countries, and they are positively related to agency cost, financial constraint, and earnings management, all of which give rise to the higher default risk. In addition, this study provides evidence that corporate governance lowers default risk by restricting FDI to less opaque markets.
[英文摘要] :
Foreign direct investment (FDI) has become highly popular in recent decades. This study investigates how FDI by Taiwanese firms affects default risk. The results indicate the default risk does not change for FDI in China but increases in non-China areas. The FDIs in non-China areas are primarily in tax haven countries, and they are positively related to agency cost, financial constraint, and earnings management, all of which give rise to the higher default risk. In addition, this study provides evidence that corporate governance lowers default risk by restricting FDI to less opaque markets.