Investigation of enterprise value using information transparency: The case of optoelectronic industry

AuthorYu‐Tai Yang,Tzu‐Yi Yang,Chin‐Mei Chou
Published date01 January 2020
Date01 January 2020
Investigation of enterprise value using information transparency:
The case of optoelectronic industry
Tzu-Yi Yang
| Chin-Mei Chou
| Yu-Tai Yang
Department of Business and Management,
Ming Chi University of Technology, New
Taipei City, Taiwan
Department of Tourism Leisure and Health,
Ching Kuo Institute of Management &
Health, Keelung City, Taiwan
Department of Aeronautical and Opto-
Mechatronic Engineering, Vanung
University, Taoyuan, Taiwan
Tzu-Yi Yang, Department of Business and
Management, Ming Chi University of
Technology, Taiwan
The corporate information given to the investors is insufficient if it is only financial
information, and thus, it should include other nonfinancial information, such as
relations with the investors, to let the general public accurately understand the situ-
ation of how the enterprise creates its value, the process of corporate transparency.
Therefore, this research discusses the relationship between information transpar-
ency and enterprise value (EV) in stock-listed companies in the optoelectronic
industry that is one of the key industries in Taiwan, and using unbalanced panel
random-effects regression investigates 72 listed firms in the optoelectronic indus-
try. Determining information transparency has a significant influence on EV.
enterprise value, information transparency, optoelectronic industry
G2; G10; G15
1.1 |Research background
Today, the global economic and political situation is filled
with high risk and uncertainty, and the trends in the high-tech
sector are highly changing, including in the key industries of
the Two Trillion and Twin Star plan,namely, the semicon-
ductor industry and the optoelectronic industry, which led the
economic development of Taiwan (TaiwanJobs, 2017). From
2016 to 2017, these industries had great competitive advan-
tages, as theindustry trend headed in a positivedirection; hope-
fully, the future business operation situation can achieve new
record-breaking performance. The Two Trillion and Twin
Star planof the National Development Council (2008) is a
project implemented by the Taiwanese government in 2002 to
set up the industry core and to promote the newly emerging
industries; two trillion refers to the semiconductor and opto-
electronic industries, with over a trillion dollars in business
value, and twin star refers to the digital content industry and
biotech industry. Such a project was implemented to help with
the incubation of high-tech human resources and to increase
employment opportunities and economic development of this
country. Although the final project promotion was not so sig-
nificant, there was still progress: The semiconductor and opto-
electronic enterprises with self-developed technology had led
Taiwan to takestep forward.
In the 1990s, as the Internet was still in its infancy, the
prevalence of electronic products and traditional cameras led
the development of new products in the optoelectronic
industry; at this point in time, traditional light-emitting diode
(LED) (optoelectronic semiconductor) and traditional optical
components were the mainstream products in the optoelec-
tronic industry, and the prevalence of traditional cameras
increased the demand for precision parts in the optoelectronic
industry to a level beyond the supply. Thus, theoptoelectronic
industry was tightly locked by the industry chains of the
highly growing era of office automation (OA) and informa-
tion technology. In 2000, Taiwan's quickly growing economy
had reached the level of international society, and optoelec-
tronic technology was in an amazing era. Although the inter-
national situation was not good from a macroeconomic
Received: 22 May 2019 Revised: 21 August 2019 Accepted: 11 September 2019
DOI: 10.1002/jcaf.22420
J Corp Acct Fin. 2020;31:8399. © 2019 Wiley Periodicals, Inc. 83
perspective, Taiwan's optoelectronic technology still created
great production value. Regarding LED, the contact image
sensor (CIS), the CD player and the CD-R optical disk for
information use, scanners, and STN-LCD and TFT-LCD
panel products, Taiwan had become one of the top three
manufacturing sites in the world. In 2001, the optoelectronic
industry reached a production value of over four trillion
dollars, and the annual growth rate of the optoelectronic
industry reached 40.86% (Cheng, 2002). With the consumer
electronics and automobile industries gradually growing, it
can be expected that optoelectroni c technology will be hig hly
accepted by the public. From 2010 until today, optoelectronic
products have been widely used in many major fields.
Today, the prosperity created by the optoelectronic indus-
try in the market can be seen in Exhibit 1, which shows the
sum of the transaction value of 29 categories of stocks of
listed companies in Taiwan. From the application directions
announced by the Photonics Industry and Technology Devel-
opment Association (2009) and based on technology types,
these applications can be roughly divided into eight major
fields: (a) LED and lighting application, (b) photovoltaic,
(c) flat panel display (FPD), (d) image sensor and optical
input and output devices, (e) optical storage, (f) optical fiber
communication (OFC), (g) laser light source and application,
and (h) precision optical parts and lenses.
In the history of the optoelectronic industry in Taiwan,
many companies in this oligopoly market had formed a situ-
ation of closely related business and severe competition, and
the change in the optoelectronic industry was seen in the
business items and product structure of one company,
Largan Precision Company Limited (abbreviated as Largan).
This company once had a difficult time with the severe com-
petition of the traditional industry. In recent years, the
popularization of mobile phones has created a large demand
for optical components. Therefore, Largan reformed and
innovated at the same time; it not only improved the yield
rate of its own products but also made a precision decision
on its main product. Meanwhile, the company also diversi-
fied its business to prove its own unique vision.
From another perspective, for the foreign investor to earn
a profit from investment in the field of optoelectronics,
he/she needed to flexibly analyze and judge the corporate
value, so long-term and stable profit could be obtained from
the stocks. Chen (2002) pointed out that in the overall per-
formance of an enterprise, its intangible assets were usually
greater than its tangible assets. Therefore, the difference
between the market value and book value became larger;
thus, information transparency needed to be strengthened.
Moreover, Kaplan and Norton pointed out that the definition
of the balanced scorecard referred to a balance between
short-term and long-term goals, finance and nonfinance, and
lagging and leading indicators. Finance and nonfinance in
the definition meant that, in the evaluation of enterprise
value (EV), in addition to considering the financial perspec-
tive, the nonfinancial perspective need to be considered as
well. The balanced scorecard was used to evaluate EV, and
it was developed because in the traditional evaluation
method, too much focus was placed on financial indicators.
The future growth competence and competitive competence
of an enterprise cannot be appropriately evaluated; therefore,
in such an evaluation, it is necessary to consider four per-
spectives: finance, customer, internal flow and learning and
growth. In summary, it is clear that purely owning financial
information cannot allow for EV to be realized; therefore,
full information disclosure is needed from the enterprise,
and investors and creditors can seize the evaluation factors
EXHIBIT 1 Total traded money of 29 stocks of listed companies in Taiwan [Color figure can be viewed at]

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT