Corporate Governance and Product Market Power: Evidence From Taiwan
The International Journal of Business and Finance Research, Volume 12, Number 1, 2018
12 Pages Posted: 12 Nov 2018
Date Written: 2018
The objective of this study is to investigate how a firm’s corporate governance affects its product market power. Adopting firms listed in the TSE and the OTC Exchange from 1996 to 2011, we find three main results. Firstly, better corporate governance leads to stronger product market power. Secondly, firms with higher research and development expenditure return on assets and market to book value have stronger market power while large and high leveraged firms are weak in product market power. Last but not least, cash holding plays an important role in deciding firms’ product market power. Companies with a high level of cash holding enjoy better product market power.
Keywords: Corporate Governance, Product Market Power, Agency Problems, Cash Holdings
JEL Classification: G34
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