MNE financial flexibility and operational performance: Evidence from Taiwan

This research constructs a framework to measure a multinational enterprise's financial flexibility containing three diemnsions: (1) operational ability, (2) financing ability, and (3) liquidity ability. We then build a panel dataset of 100 information technology firms and 167 non-information technology firms in Taiwan during 1999-2003. Our major findings are as follows: (1) Export ratio, debts from foreign countries, spontaneous short-term debt ratio, and quick ratio have significantly positive effects on operational performance. (2) Foreign assets ratio has a significantly negative effect on operational performance. (3) Equity from foreign countries, mainland China investment, and external short-term debt ratio have no significant effects on operational performance.