The amount of agency problems and information asymmetric effect company value and reflect on the price. Lower company?s value, manager?s decision, credit rating and the business size will effect company financing strategies and loan interests. At the same time, agency problems and information asymmetric effect company?s optimal capital structure. Today, Taiwan?s economical development changes from labor-intensive industries to technology-intensive industries. Electronic industry is the highest rate in Taiwan?s stock market. Electronic industry have three characteristics: high growth, quickly business cycle and high cash flow. So this study combine scholars research, to observe that when company have information asymmetric and agency problems, how to effect capital structure ? This research takes Taiwan electronics information industry in the stock market as study case. The sample of this research is base on the TEJ database and Market Observation Post System from 1999 to 2004.,used three-least squares method to investigate the impact of the relationships of capital structure on agency problem and found that debt has a negative effect on company value and dividend, and dividend has a negative effect on company value; company value, dividend and debt are endogenously and correlated. These findings have important implications to the governance of capital market. The increase of a company?s debt or dividend will encourages the company to enter capital market to raise needed cash and thus accept market monitoring, and the agency problems caused by free cash flow will then be reduced.
