Chiang and Cheng: Government ownership and corporate performance – evidence from green technology industry in Taiwan


Taiwan’s green technology industry profitability is high, and the output value growth rate is greater than the global market. However, its credit risk volatility is higher than the average of all industries, indicating that the impact of cost of capital and financing needs is more important than in other industries. This study focused on Taiwan’s green technology industry from 2005 to 2009 and explored the impact of the governance structure of the green technology industry on corporate credit risk and operating effectiveness. Data were sourced from the Taiwan Economic Journal (TEJ) database; 330 samples were used in this study.

The empirical results demonstrated that a good corporate governance structure can reduce the green technology industry’s corporate credit risk and improve operational effectiveness. The study found that government shareholding, trust fund shareholding, and corporate shareholding reveal a supervision effect. However, different governance factors have different incremental effects. The governance structure of the green technology industry with governmental ownership has the greatest incremental effect.
This study also found a U-shaped relationship between the government ownership and corporate performance. Moreover, government ownership has different supervision effects among companies with different levels of innovation capital. Green energy group enterprises or the solar photovoltaic industry can strengthen the supervision
mechanism and improve the governance effect through governmental investment shareholdings.


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