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The nonlinear relationship between financial flexibility and enterprise risk-taking during the COVID-19 pandemic in Taiwan's semiconductor industry

100%

Chang B.-G., Wu K.-S.

Oeconomia Copernicana

2021

vol. 12

issue 2

307-333

Research background: Risk-taking is the basis for sustainable development of enterprise. It was clear that the influence COVID-19 epidemic on the global market economy has increased operational risks for businesses. The semiconductor industry has high operating risks and financial risks. Moderate financial flexibility (FF) can improve the ability of semiconductor enterprises to acquire financial resources in real time, calmly cope with the impact of uncertainties in operation, improve investment opportunities, and enhance sustainable operation. It is therefore interesting to study the influence of FF on enterprise risk-taking (ERT). Purpose of the article: The aim of the contribution is to explore the effect of FF on ERT within Taiwan's semiconductor industry amid the COVID-19 pandemic period, and investigate whether ERT varies with semiconductor industry characteristic. Methods: Data from first three quarters of 2020, from multinational semiconductor firms listed on the Taiwan Stock Exchange (TSE), were collected and analyzed. Fixed effects regression with heteroscedasticity adjustment used to evaluate the influence of FF on the ERT of Taiwan's semiconductor industry. Furthermore, in order to corroborate and support the reliability of the results, this research also used the different measures of ERT and Quantile regression (median regression) in the research model to check the robustness. Findings & value added: Empirical results indicate that FF has a U-shaped effect on ERT for multinational semiconductor firms listed on the TSE, particularly within the integrated circuits (IC) manufacturing industry. Additionally, FF also has a U-shaped effect on ERT for the asset-light semiconductor and IC manufacturing industries. This article also suggests that for the asset-light semiconductor and IC manufacturing industries, the optimal inflection points are 1.1397 and 0.9729, respectively. Based on the consequences of this study, it is suggested that Taiwan?s semiconductor industry should reasonably maintain FF and focus on the liquidity risk management for the long term value added, even after the COVID-19 pandemic period.

Investigating the double-edged sword effect of environmental, social and governance practices on corporate risk-taking in the high-tech industry

81%

Teng X., Wu K.-S., Kuo L., Chang B.-G.

Oeconomia Copernicana

2023

vol. 14

issue 2

511-549

Research background: Corporate risk-taking (CRT) is crucial to a business's survival and performance and is a driving force for sustainable development. Environmental, social and governance (ESG) practices are critical to firm profits when considering sustainable economic growth; however, they can also be the cause of financial burdens. It is, therefore, crucial to assess the relationship between a company's ESG performance and its risk-taking. Purpose of the article: Considering the controversial results of empirical studies on the relationship between ESG and CRT, this study aims to theoretically and empirically investigate the curvilinear nexus between ESG practices and CRT within Taiwan's high-tech industry. Methods: Ordinary least square regression and quantile regression analysis was applied to investigate the curvilinear ESG-CRT relationship. The empirical studies were conducted in 38 high-tech companies on the Taiwan Stock Exchange that disclosed ESG information between 2005 and 2020, with a total of 437 firm-year observations. Findings & value added: Quantile regression estimation results reveal the ESG-CRT nexus is U-shaped (convex). Both the environmental and social pillar's relationship with CRT is nonlinear and U-shaped, whereas the governance pillar has no significant relationship with CRT. Overall, a comprehensive view is provided that shows ESG practices can have a double-edged sword effect on CRT. It is suggested that high-tech companies in Taiwan should avoid ESG practices becoming a tool for managements' self-interest. More information of ESG practices should be disclosed to stakeholders to ensure they are given full credit for the positive impact they have on capital allocation. Regulators guide firms to surpass the threshold of the U-shaped effect and take into consideration the whole benefits of stakeholders when they allocate existing resources toward environmental and social endeavors.

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2 Oeconomia Copernicana

2 Chang B.-G.

2 Wu K.-S.

1 Kuo L.

1 Teng X.

1 2023

1 2021

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The nonlinear relationship between financial flexibility and enterprise risk-taking during the COVID-19 pandemic in Taiwan's semiconductor industry

Investigating the double-edged sword effect of environmental, social and governance practices on corporate risk-taking in the high-tech industry