CONCAVE EFFECT OF FINANCIAL FLEXIBILITY ON SEMICONDUCTOR INDUSTRY PERFORMANCE: QUANTILE REGRESSION APPROACH

To survive increasingly uncertain and competitive markets, technology and capitalintensive semiconductor companies need to be more agile, responsive and flexible than ever before. This study investigates the impact financial flexibility on firm performance within Taiwan???s semiconductor industry and whether the impact on FP differs depending on the semiconductor industry characteristics. Using quantile regression analysis, data from semiconductor companies listed on the Taiwan Stock Exchange during the COVID-19 shock was investigated. The results evidence an inverted U-shaped relationship between FF and FP in the lower and median return on equity quantiles of the semiconductor industry. For the asset heavy business model companies, FF has a concave impact on FP for IC-design and IC-manufacturing companies but not the semiconductor companies. For the asset light business model companies, FF has a concave impact on FP in the lower and median quantiles for semiconductor companies, in the upper quantiles for IC-design companies and in all except the 90th quantile for IC-manufacturing companies. The results of this research significantly contribute to extant literature as with such specific knowledge regarding the impact of FF on FP, managers are able to make decisions based on a firm???s individual FF-FP relationship and identify the most lucrative business trajectory.

Convex-concave effect of financial flexibility on hospitality performance: quantile regression approach

Purpose: The purpose of this paper is to study the influence of financial flexibility (FF) on enterprise performance (EP) within Taiwan’s hospitality industry during the COVID-19 shock and explore whether EP varies with hospitality industry characteristics. Design/methodology/approach: Secondary data of 39 Taiwan Stock Exchange-listed hospitality firms were collected from the Taiwan Economic Journal databases. Quantile regression analysis was applied to examine the FF-EP relationship Findings: The results evidence that there is a U-shaped (convex) FF-EP relationship for hospitality firms in the 10th, 25th and 50th Tobin’s Q quantiles and in asset-heavy firms. For asset-light firms, FF has an inverted U-shaped (concave) effect on EP in the 90th Tobin’s Q quantile Practical implications: The empirical results highlight the need for Taiwan’s hospitality industry as a whole to take rolling adjustment and optimization of FF and concentrate on liquidity risk management after the COVID-19 pandemic and for long-term sustainability. Originality/value: To the best of the authors’ knowledge, this study is one of the first to examine the nonlinear FF-EP relationship in the hospitality industry of Taiwan, particularly amid the COVID-19 shock. Moreover, this study extends current literature by revealing the hospitality industry’s FF-EP relationship and highlights the importance of the pandemic crisis context. © 2021, Emerald Publishing Limited.

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

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. © 2021 Nicolaus Copernicus University. All rights reserved.