Management Review

Vol. 43 No.1, Jan. 2024

Robin K. Chou　Editor’s Note (excerpt)

This issue of Management Review contains three academic articles.

The first article, “Do Different Types of Warnings about the Duty of Disclosure Influence the Acts of Applicants?” was co-written by Jin-Lung Peng, Yen-Chih Chen, Chen-Hsu Liao, Ping-Chi Lee, and Yao-Nan Chen. Insurance companies issue warnings to applicants regarding the Duty of Disclosure as stipulated in Article 64 of the Taiwan Insurance Act. This study aims to determine whether the timing of informing the applicants, either in advance or after the fact, would have varying impacts on their behavior. The findings indicate that applicants exhibit a greater level of truthfulness when they receive warnings in advance, as opposed to receiving them after the fact. Moreover, the disclosure rate of applicants is higher when warnings are provided in advance.

The second article, “Reexamining the Impact of Corporate Governance on Firm Performance in Taiwan: An Empirical Analysis Based on Long-term Sample and Newly-constructed Indicators” was co-written by Yi-Wei Chuang, Yu-Ting Wang, Chi-Yeh Lu, and Pei-Shih Weng. This study aims to enhance corporate governance awareness in Taiwanese enterprises by assessing and reconstructing a comprehensive index. It delves into the correlation between governance and key performance metrics like ROA and Tobin’s Q and tracks the two-decade evolution of corporate governance in Taiwan. Utilizing the TEJ database, the authors selected 113 corporate governance variables. Through stepwise regression, 18 pivotal variables emerged and were grouped into three dimensions: board of directors’ seats, ownership structure, and personnel stability. This study spans 2003 to 2019, analyzing 1,485 companies. The formulated corporate governance index, along with its three dimensions, shows a robust positive association with corporate performance. The index aptly signifies the potency and pertinence of governance to performance.

The third article, “Day Trading and Tax Avoidance”, was co-written by Chia-Hsin Chiang, Da-Kai Wu, Po Chia Lai, and Jenn-Shyong Kuo. This study examines whether increased liquidity from day trading can attenuate a firm’s extreme tax avoidance. The results show that the increase in day trading liquidity exacerbates tax avoidance. Increased liquidity can benefit the stock market to some extent. However, the potential costs and risks need to be considered.