A Study on Performance Measurement of High-Tech Industry: An Application of Panel Threshold Effect Model

This research discusses that, under the fluctuation of the debt ratio, how the financial ratios affect the operational performance, such as rate of return on assets (ROA). The study applies panel data threshold effect model (Hansen, 1999, 2000). The sample is gathered from the annual data of the listed companies in the high-tech industry in America from 1999 to 2004. In order to make different threshold models objectively, this study uses debt ratio as the threshold variable. The study adopts the debt ratio to determine the threshold models for ROA of high-tech industry. In the end, the empirical result gets one threshold and also shows that compared with the traditional linear regression, the threshold model, which is determined by the debt ratio, can get higher coefficient of determination.