Analyzing the relationship between multinational corporate strategy and financial derivatives in Taiwan

Abstract

This article examines the connection/relationship between multinational corporate strategy and the effect of the financial derivatives market in Taiwan. The paper uses a qualitative methodology and an interview research method to determine which types of firms would be most able to benefit from a full-fledged and open derivatives market in Taiwan. Dividing the firms into three types – multinational firms operating with branches in Taiwan; local firms operating as multinationals with branches outside Taiwan; and pure domestic firms, the paper analyzes and compares the determinants and impacts in the adoption of different forms of internationalized strategies. It is hoped that an optimized strategy can be worked out. The significance of the article is that the reaction of Taiwanese industry to derivatives could well determine the country’s economic performance in the 21st century Most commentators agree that derivatives will play a major role in the future with derivatives markets enjoying vast amounts of equity. Taiwan has all the equipment, infrastructure, advanced technology and skilled labor to benefit from a mastering of the derivatives market.

Keywords and phrases:

• Derivatives
• swaps
• options
• forwards
• OTC
• equity markets