Journal of Economics and Management Volume 15, No. 1 February, 2019

Do Taiwanese Family Firms Have a Lower Propensity to Pay Cash Dividends? The Roles of Corporate Governance, Product Market Competition and Corporate Social Responsibility

Yi-Chein Chiang

Department of International Business, Feng Chia University, Taiwan.

Jing-Fen Cheng

Department of International Business, National Taichung University of Science and Technology, Taiwan.

Tung Liang Liao

Journal of Economics and Management Volume 15, No. 1 February, 2019   Impact of Working Capital Management on Profitability: Study on Foreign Ownership in Taiwan   Yi-Chein Chiang Department of International Business, Feng Chia University, Taiwan.   Jing-Fen Cheng Procurement, Shi Shin Food Co., LTD, Taiwan.   Kuei-Chih Lee Department of International Business, National Taichung University of Science and Technology, Taiwan.   Tung Liang Liao Department of Finance, Feng Chia University, Taiwan.

Abstract

This study examines the relationship between working capital management and profitability during 2000–2016 from the viewpoint of foreign ownership in the Tai-wan stock market. Our findings reveal that a rise (decline) in working capital in-vestment increases (decreases) profitability for foreign-controlled firms with lower net working capital (NWC) levels, where firms’ NWC investments are generally in-sufficient. However, this phenomenon cannot be observed at higher NWC levels, where firms tend to make excess NWC investments. Further, we find no such asymmetric effect for firms without foreign ownership. Moreover, firms with higher foreign ownership are less likely to have a stronger effect on NWC management. These findings show that foreign investors positively impact profitability at the low-er NWC level, and this is particularly true for firms with lower foreign ownership in the Taiwan stock market.

Keywords：Foreign Ownership; Working Capital Management; Profitability.

JEL Classifications：G10, G30, G32.

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