Taiwan's Security Research Articles

A Hybrid Rule-Based Rough Set Approach to Explore Corporate Governance: From Ranking to Improvement Planning

This research introduces a rule-based decision-making model to investigate corporate governance, which has garnered increasing attention within financial markets. However, the existing corporate governance model developed by the Security and Future Institute of Taiwan employs numerous indicators to assess listed stocks. The ultimate ranking hinges on the number of indicators a company meets, assuming independent relationships between these indicators, thereby failing to reveal contextual connections among them. This study proposes a hybrid rough set approach based on multiple rules induced from a decision table, aiming to overcome these constraints. Additionally, four sample companies from Taiwan undergo evaluation using this rule-based model, demonstrating consistent rankings with the official outcome. Moreover, the proposed approach offers a practical application for guiding improvement planning, providing a basis for determining improvement priorities. This research introduces a rule-based decision model comprising ten rules, revealing contextual relationships between indicators through if–then decision rules. This study, exemplified through a specific case, also provides insights into utilizing this model to strengthen corporate governance by identifying strategic improvement priorities.

US’ TAIWAN STRATEGY: AN INSTRUMENT TO CONTAIN CHINA

The issue of Taiwan has become a major point of contention between the US and China, with visits by US officials resulting in strong criticism from China and military escalation in the region. Experts are concerned that a conflict between these two powers in the Asia-Pacific region could endanger global peace and stability, especially given the ongoing Russia-Ukraine conflict. China maintains its claim over Taiwan under the 'One China Policy,’ considering it a lost province and advocating for its unification with the mainland. While recognising Taiwan as part of China under this policy, the US engages in diplomatic and military activities with Taiwan, which China considers interference in its internal affairs. In the post-Cold War era, the US adopted an ambiguous policy towards Taiwan as part of its containment strategy against China. Therefore, the US seeks to slow China's perpetual growth by promising enhanced defence for Taiwan. Recent US official visits to Taiwan reflect provocative measures in line with this strategy. This paper analyses the US' Taiwan policy as a containment instrument against China, recent measures adopted by the US administration to provoke China, Taiwan's strategic significance, and the US' long-standing commitment to Taiwan's security as essential for maintaining its leadership role in international affairs. Bibliography Entry Farooq, Muhammad. 2023. "US’ Taiwan Strategy: An Instrument to Contain China." Margalla Papers 27 (1): 96-108.

Taiwan in the Indo-Pacific Region: Prospects and Challenges

Taiwan's security is inextricably linked to the strategic stability and preservation of the regional order in the Indo-Pacific region. For the leading Indo-Pacific powers, particularly the United States, maintaining the status quo ante in the Taiwan Strait is an integral part of the rules-based order. The United States and Japan have linked it to their own security. Even though Taiwan has no formal diplomatic relations with the majority of the nations in the Indo-Pacific region, it is an intrinsic part of the regional dynamics, particularly in trade, investment, and regional supply chain contexts. Taiwan has been trying to regain its political and diplomatic position in recent years, especially under the Tsai Ing-wen administration. In that context, the Taiwan government has been reiterating the need to collaborate with the Indo-Pacific countries to safeguard a rules-based order and secure a more resilient and peaceful Indo-Pacific community. Taiwan's advocacy for an open, transparent, inclusive, rules-based order is backed by its good governance practices domestically and non-confrontational approaches externally. A region as diverse as the Indo-Pacific, where like-minded countries face a range of shared and divergent concerns and interests, needs to be truly inclusive to find solutions to traditional and non-traditional security challenges. Furthermore, the China-US rivalry, with Taiwan as a major factor between the two, is shaping the Indo-Pacific discourse. This article discusses Taiwan's centrality in the Indo-Pacific dynamics, particularly regarding the region's major power politics.

Pelosi's Intoxication of Taiwan and Democrat's Flopped Performance in the US' Midterm Election

Although traditionally, flopped performance of the Democrats in the US mid-term elections and Pelosi's failure to retain the majority of the house is expected, many analysts do not rule out the possibility of an increased significant connection between the development between the US election and events in the international politics. Therefore, it is highly likely for Taiwan to consider foreign policy options without US security protection in the face of China's threat under President Xi Jinping's third term is inevitable. This brief commentary provides views to answer some of the following questions; What is the most important international security lesson since the incident of Nancy Pelosi's visit as the former Leader of the United States (US) Congress to Taiwan last August 2022? How does the increasing tension in relations between Beijing and Washington foreshadow Taiwan's security future as it becomes increasingly dark and uncertain from the possible invasion of Mainland China?

Level and speed of acquisition integration and their effects on technological performance

PurposeThis study concerns two aspects of the integration process critical for the success of acquisitions: (1) levels of human integration and task integration and (2) speeds of human integration and task integration. The purpose of this study is to examine the interaction effects of human/task integration level and human integration speed advantage on acquisition performance.Design/methodology/approachThis study collected data of companies in the Taiwanese high-tech industries at the financial, organizational and industrial levels to examine the proposed hypotheses. Corporate financial and patent data were collected from the Taiwan Securities and Futures Commission databases and the Intellectual Property Office (IPO) databases. The organizational level data were collected from 142 publicly traded related acquisitions from 2008 to 2009 in the Taiwanese high-tech industries.FindingsThe results show that (1) a high level of human integration positively affects technological performance; (2) the interaction term of human integration level and human integration speed advantage (i.e., relatively faster human integration coupled with slower task integration) positively affects technological performance; and (3) the interaction term of task integration level and human integration speed advantage positively affects technological performance.Originality/valueThe originality of this study lies in advancing our understanding of how complex interactions between human/task integration level and human integration speed advantage affect acquisition performance.

Strait Rituals: China, Taiwan, and the United States in the Taiwan Strait Crises, 1954–1958 by Pang Yang Huei

Reviewed by: Strait Rituals: China, Taiwan, and the United States in the Taiwan Strait Crises, 1954–1958 by Pang Yang Huei Xiaobing Li bli@uco.edu Pang Yang Huei Strait Rituals: China, Taiwan, and the United States in the Taiwan Strait Crises, 1954–1958 . Hong Kong: Hong Kong University Press, 2019. 317 pp. $55.00 (cloth). Few areas of research on international crises are more difficult than the Taiwan Strait crises of the 1950s, due to their historical role in the origins of the Cold War in East Asia and their unique geopolitical position in relation to the ongoing tensions among the People's Republic of China (PRC), the Republic of China (ROC or Taiwan), and the United States. Conventional texts have adopted a Cold War approach, characterizing the Taiwan Strait crises as byproducts or a sideshow of the confrontation between two contending camps: the free world and Communism. Therefore, the crises resulted naturally from an ideological conflict, misunderstanding, or miscommunication of the other's intention. The communication obstacle between Communist and non-Communist governments was that each projected themselves into the frame of reference within which the other operated. On the basis of extensive, multiarchive research, Pang Yang Huei diverts from the usual Cold War approach, focusing instead on the relatively neglected area of each government's national interest, security concern, and a "quiet diplomacy" (267) through their "tacit communication" (268). His interpretation of the tacit accommodation process "allows one to appreciate the complexity of adversarial and alliance diplomacy" (6) and makes a new contribution to this case study. Beginning in the first chapter, Pang follows major historical events and introduces his approach and sources. Then, he sets up a stage for the crises in chapters 2–4 by providing a historical background of PRC-ROC-United States relations from 1950 to 1954, emphasizing the Geneva Conference (1954) as "a foundation for Sino-US tacit communication" (49). Nancy Bernkopf Tucker's work indicated that the Truman and Eisenhower administrations made commitments to Taiwan's security in the early 1950s, despite it being riddled with mistrust, ignorance, and "strategic ambiguity." 1 In retrospect, US policy and the Korean War simultaneously disengaged the Chinese from their hot civil war and engaged them in the global Cold War. Harry Truman's legacy was to keep the Taiwan Strait military struggle "cold" and build the basis for political and international competition in which both Chinese parties could find alternatives or potentially a peaceful solution to their civil struggle. Truman did not intend to postpone the Chinese Civil War or provide Beijing with a different reason to attack Taipei. Leaders of the Chinese Communist Party (CCP) in Beijing understood Truman's policy and stopped their planned landing operation against Taiwan in 1950–1953. 2 Certainly, the Korean War played an important role in Beijing's strategic shift from the Taiwan Strait to the Korean Peninsula. Pang devotes chapters 5 and 6 to the crisis of 1954–1955 and shows that "a ritualized pattern of diplomacy emerged in spite of the belligerent rhetoric hurled around" (152). Scholars have searched for the answers to Chinese war decisions and use of military forces. 3 In 1954, Beijing perceived unmistakable indications that the Taipei-Washington collaboration was accelerating. If a quick and effective message was not conveyed to the Eisenhower administration, Beijing believed, American cooperation would legitimize Taiwan within international politics, hindering the PRC's goal of gaining full acceptance [End Page E-14] in the international community. On the one hand, Chinese leaders seemed willing to accept the fact that the PLA (People's Liberation Army; the PRC's armed forces), as a weak army, would not fight the superior US armed forces in the Taiwan Strait if the Americans made a commitment to its defense. On the other hand, Beijing used armed forces in the Taiwan Strait explicitly to demonstrate its determination as well as to encourage possible restraint from Washington. Meanwhile, US nuclear threats in the spring of 1955 forced Chinese leaders' momentous decision to make their own nuclear bomb. Thus, the 1954–1955 Taiwan Strait crisis may be viewed as the starting point of China's nuclear weapons development program. 4...

The Effect of the ‘China Factor’ on Taiwan’s Media System Security as an Example of the ‘Privatization and Outsourcing’ of Censorship and Propaganda in the Digital Age

The study aims to examine the security of Taiwan’s media system. Its main hypothesis is that the People’s Republic of China is pursuing a deliberate strategy of influencing Taiwan’s media at various levels by a range of means. Some authors refer to this approach as the commercialization and outsourcing of censorship and propaganda. The approach has had the effect of routinizing self-censorship. Research questions are also asked about the methods and strategies adopted by China to influence Taiwan’s media, including the commercialization and outsourcing of propaganda. The idea is to ‘hire’ various state institutions and agencies or their subordinate organizations, commonly from the private sector and from third countries, to deliberately disseminate and endorse views and ideas aligned with China’s interests. The strategy can be described as an invasion of sorts that is not of a coercive and/or external nature but rather is performed from the inside, aimed directly at the hearts and minds of the country’s citizens. The paradox is that democratic media systems that protect freedom of speech are more vulnerable to this strategy. An attempt is made to demonstrate that the ‘China factor’ is increasingly present in Taiwan’s media landscape. Its effectiveness may have grave consequences not only for the me- dia system itself but also for the political system of the Republic of China (Taiwan) in general. In addition, the article seeks to identify the most appropriate and effective strategies and means for countering and combatting such threats. In drafting this article, a range of research methods were employed, including that of inductive and deductive inference, the historical method (used to outline the historical background behind significant social and political transformations in Taiwan), the institutional and legal analysis method (used to explore the influence of institutions on specific social phenomena), the legal text exegesis method as well as the statistical method (to describe Taiwan’s media system).

The Certainty of Uncertainty: Taiwanese Public Opinion on U.S.–Taiwan Relations in the Early Trump Presidency

The election of Donald Trump has injected new uncertainties into the conduct of U.S. foreign affairs in Asia. For Taiwan, regional security is challenging because it must simultaneously deal with an increasingly belligerent China and an America led by the unconventional Trump. Based on public opinion data, this study analyzes how the Taiwanese public perceives the state of U.S.–Taiwan relations, and how certain they are about America's overall commitment to Taiwan in this era. Results indicate that people in their 20s, pan‐Green partisans, and those favoring Taiwan independence perceive U.S.–Taiwan relations to be better under President Trump. Moreover, supporters of the pan‐Green coalition and of Taiwan independence, together with the more “ambivalent” respondents, likewise feel more certain about America's commitment to Taiwan's security. On the contrary, pan‐Blue partisans and Taiwanese citizens with mainland Chinese ethnicity are generally more pessimistic and skeptical about U.S.–Taiwan ties and partnership with Trump in the White House.

The Taiwan Relations Act: Past, Present, Future

The Taiwan Relations Act:Past, Present, Future Shelley Rigger (bio) When the United States normalized relations with the People's Republic of China (PRC) in 1979, it agreed to derecognize Taiwan (officially named the Republic of China, or ROC). Beijing made derecognition a precondition for establishing diplomatic ties in an effort to overcome what it saw as a long-standing wrong: the separation of Taiwan from the Chinese mainland. Then, as now, Beijing wanted to incorporate Taiwan into the PRC, and it wanted the United States to get out of its way. Taiwan had been detached from China since 1895, when it became a Japanese colony, but at the end of World War II it was handed over to the Chinese government—at that time, Chiang Kai-shek's Nationalist-led ROC, which had ruled China since 1912. In 1949, Communist forces drove the Nationalist government off the mainland, but they were unable to capture its stronghold, Taiwan. The ROC hung on thanks to its outsized armed forces, its military alliance with the United States, and one hundred miles of choppy water. The architects of U.S.-PRC normalization understood that without U.S. support, Taiwan would be hard-pressed to withstand Beijing's efforts to absorb it. They did not anticipate that the ROC would last long as a separate, self-governing entity once the United States shifted its recognition to the PRC, and they were willing to accept that outcome. President Richard Nixon's national security adviser Henry Kissinger said as much in a 1971 exchange with Zhou Enlai recounted by Nancy Bernkopf Tucker: Zhou Enlai asserted to Kissinger without hesitation that "the U.S. must recognize that the PRC is the sole legitimate government in China and that Taiwan Province is an inalienable part of Chinese territory which must be restored to the motherland." Kissinger replied, "As a student of history, one's prediction would have to be that the political evolution is likely to be in the direction which Prime Minister Zhou Enlai indicated to me." Kissinger continued by assuring Zhou, "We will not stand in the way of basic evolution."1 [End Page 11] By the time the normalization process was reaching its final stage under President Jimmy Carter, the United States was committed to derecognizing Taiwan and ending the mutual defense treaty. Fortunately for Taiwan, however, the White House did not have the last word. As the process neared completion, there still was one more actor waiting to speak: the U.S. Congress. Congress could not reverse the decision on normalization, but it did what it could to soften the blow. Congress's gift to Taipei was the Taiwan Relations Act (TRA). The TRA satisfies no one. Beijing sees the ongoing attention to Taiwan's security that is required by U.S. law as a betrayal of U.S. commitments, while Taiwan would much prefer to be treated as a full state. Many Americans, too, wish the United States could take a stronger position one way or the other than the TRA allows. I will argue, however, that the TRA's ambiguity is a virtue, not a vice. Coming up with an alternative that improves on the TRA enough to justify the inevitable backlash from Beijing (which would be directed at Taipei more than Washington) is considerably harder than one might imagine. The Significance of the TRA The TRA created an innovative framework in U.S. law and policy that allows the United States to interact with an unrecognized state. Legally, the ROC is dead to the United States; in practice, it is very much alive. The law gives Taiwan a unique legal and political position, with the country being neither formally recognized nor entirely abandoned. Recently, some advocates for a more robust U.S. policy toward Taiwan have been asking how much longer this limbo should continue. They wonder whether the United States should do more to strengthen the island's position in the face of growing pressure from the PRC.2 The TRA defines its goals as "to help maintain peace, security, and stability in the Western Pacific and to promote the foreign policy of the United States by authorizing the continuation...

The Dream: Global Trade Relations in a New World Order

“East Asia’s stunning development path owed much to the nature of American power and of the region’s structure of alliances, producing economic successes that have never been matched elsewhere. The United States not only guaranteed the security of Japan, South Korea and Taiwan, allowing them to focus on economic development; it also provided them with the incalculable advantages of technical assistance, educational exchanges and nearly unfettered access to America’s vast markets. Crucially, it did not, at least initially, insist that these countries open their own markets in return. It took two decades for China to come out of its shell when America’s then president, Richard Nixon, paid a visit to Beijing. The ground for China’s opening to America was prepared by a rupture in its relations with the Soviet Union in 1960. For over four decades it has been an unambiguous beneficiary of the American order. Without America to keep its neighborhood secure and underpin open markets, China could not have reaped such gains from the market-led reforms it launched in the late 1970s.” The Economist (2017b). This chapter aims to illustrate how shifts in the global economic order have developed – and have been transformed over the years – as well as consequences of new trade relationships for the current US administration in its bid to restore the country to its leading global economic role.

The Effect of Exchange Rate Volatility on Stock Return in Taiwan Around Abenomics

The purpose of this study is to investigate the relationship between stock returns, exchange rates and financial ratios in the automotive and integrated circuit industries in Taiwan around the introduction of Abenomics. We employ panel data from 34 listed companies on the Taiwan Security Exchange over the period 2011-2014. The Panel Smooth Transition Regression (PSTR) model is utilized to estimate the threshold of exchange rates and its effect on stock returns. The main finding of this paper shows that there exists an efficient hedge regime. When the Abenomics applied a policy of quantitative easing to instigate a sharp depreciation of the yen, the effects of the policies absolutely bring out benefit and competitive advantage of Japanese export industries. The depreciation of the exchange rate against other currencies would affect a country?s international competitive advantage or exports. If Taiwan exchange rate does not follow the depreciation of the yen and the levels of the exchange rate volatility in the automotive and integrated circuits industries in Taiwan are over 2.30% and 2.72% appreciation, respectively, the both industries will generate exchange losses and further influence the profit of the companies. Therefore, the main contribution of this paper is to provide a means for CEOs of companies in the two industries to exercise hedge options and evade the risk of exchange rate for their firms when the appreciation of currency are over 2.3% and 2.72% for automotive and integrated circuits industries, respectively.

The efficiency of non-homogeneity security firms in Taiwan

Data envelopment analysis (DEA) is a nonparametric technique for determining the efficiency of a homogeneous set of decision-making units (DMUs). There are two common problems with traditional DEA. First, traditional DEA fails to adequately distinguish the efficiency DMUs. Second, the DMUs within the same industry are non-homogeneous. This study aims to develop a system-ranking-efficiency model to solve the problems of non-homogeneity and efficiency ranking for DMUs in the same group. The proposed system-rankingefficiency model is based on the concept of boundary change and considers the efficiency DMUs with the greatest influence on the boundary as the most important and, thus, as the ones that should have the highest efficiency ranking. The model is applied in the Taiwan securities industry, in which it was found to successfully rank all the DMUs.

Managerial incentives and R&D investments: The moderating effect of the directors’ and officers’ liability insurance

Literature regarding the impact of managerial incentives on firm’s research and development (R&D) investments suggests that due to the riskiness of R&D activities, firms need to provide managerial incentives to encourage managerial discretion on corporate long-term investments of R&D. In spite that managerial incentives influence corporate R&D spending, some also argue corporate R&D spending a function of managerial incentive schemes. This paper applies the simultaneous equation to investigate the association between managerial discretion on R&D investments and the incentive scheme of CEO compensations by using the sample firms listed in Taiwan Security Exchange and Taipei Exchange. The results indicate that the listed firms in Taiwan simultaneously determine corporate R&D investments and CEO compensations. They reward their CEOs in compliance with their efforts on R&D investments and CEO compensation motivates CEOs to align their interests with firms’ long-term investments on R&D. A further analysis of the protection effect from the directors’ and officers’ (D&O) liability insurance suggests that D&O protection intensifies the relationship between R&D investments and CEO compensation. It encourages CEOs to allocate resources on R&D activities and make CEO incentive contracts efficacious on corporate long-term investments. The result is robust in the electronic industry of Taiwan.

Taiwan's Quest for International Space: Ma's Legacy, Tsai's Options, China's Choices, and U.S. Policy

Taiwan's “international space” has been a vital concern for the nation's leaders, and increasingly so as China has grown in power, influence, and ability to “squeeze” Taiwan's international space and thereby undermine the international stature that matters for Taiwan's security. President Tsai Ing-wen inherits a legacy of multi-pronged efforts and some successes, and will seek to build on them as she pursues her own distinctive approach. But she must do so in the face of continuing, and possibly increasing, resistance from Beijing and amid uncertainty about the policies of key states, including China and the United States.

Re-examining risk premiums in the Fama–French model: The role of investor sentiment

This paper reconstructs the Fama–French three-factor (F–F) model as a panel smooth transition regression (PSTR) framework to investigate the differentiated effects of investor sentiment proxies-the volatility index (VIX), credit default swap (CDS), and TED spread-on the three risk premiums. Sample period spans from 2003: 1Q to 2013: 4Q. Sample objects are 58 semiconductor companies listed on Taiwan Security Exchange Corporation. The empirical results report that stock returns display a nonlinear path, and the three risk premiums are time-varying, depending on different proxies of investor sentiment in different regimes. Market premiums fall as investors in stock markets show extreme optimism or extreme pessimism. Except in rare situations, the size premium is significant and decreases with the increase in the VIX. Returns in holding growth stocks dominate holding value stocks when the investors show extreme pessimism or optimism. However, in normal sentiment of investment, value stocks earn more returns than growth stocks.

The Relationship between Initial Conditions and Organizational Survival: An Empirical Examination of Taiwan’s Securities Firms

Startup firms usually have lower survival probabilities. For startup firms, initial founding conditions are intrinsic characters that may directly influence their survival probabilities. This study aims to examine the effects of initial conditions on a new business's survival probability, using a sample of Taiwan's securities firms. We adopt event history analysis to explore the relationship between survival probability and initial conditions, including initial scale, entry timing, and equity network support at founding. Empirical results support all hypotheses.

The Military Security Policy of Taiwan: Current Situation and Challenges for the Future

This paper examines the current defense doctrine of the Republic of China (Taiwan), including its evolution – from the offensive approach during the first phase of Taiwan's history, later approaches of “resolute defense, effective deterrence” and “effective deterrence, resolute defense” – to an adjusted approach in the 2000s that was a more realistic and feasible doctrine aimed mainly at preventing the People's Republic of China's forces from landing and establishing secure footholds, based on an asymmetric approach. The main elements touched upon in this article are those related to Taiwan's military security, including current and future challenges and threats, Taiwanese perception of the international environment, an assessment of capabilities and procurement plans of its armed forces (land forces, navy, air force, air defense), problems of political and military allies as well as decreasing military spending that negatively impacts modernization efforts. The final part of this paper presents various recommendations that would allow Taiwan to boost its defense potential.

Effect of information disclosure and transparency ranking system on mispricing of accruals of Taiwanese firms

This paper examines whether disclosure transparency, as measured by the rankings of “Information Disclosure and Transparency Ranking System” (IDTRS) constructed by Taiwan Securities and Futures Commission in 2003, reduces accrual anomaly and is useful particularly for sophisticated investors in valuing stocks using accruals. The preliminary results indicate that firms with high rankings show a limited reduction in overpricing of accruals and cash flow and lower abnormal returns, relative to firms with low rankings in disclosure transparency. Given more disclosure, firms with more sophisticated institutional shareholders exhibit significantly lower mispricing of accruals and future abnormal returns. However, after controlling for confounding factors influencing stock returns, we find no evidence that accruals predict abnormal returns. Taken together, the findings suggest that IDTRS is useful in reducing mispricing of accruals for sophisticated investors, but the disclosure effect of the IDTRS may not be considerable enough to exhibit substantial benefit from disclosure on mitigating the mispricing of accruals. The evidence provides policy implications to the regulatory authority in developing a mechanism to lessen the information asymmetry problem.

The Correlation between Bid-ask Volume and Weighted Stock Index of Taiwan Securities

This study uses quantile regression to discuss the relationship between the bid-ask volume at market opening and the rate of returns of the weighted stock index (WSI). The average sold bid-ask volume at market opening of the previous 20 days is treated as the proxy variable to measure the “level of market capital”; the difference between the intraday buying bid-ask volume at market opening and the average bought bid-ask volume of the previous 20 days is treated as the proxy variable of “the level of buyer intention”; and the difference between the intraday buying and selling volumes at the market opening are treated as the proxy variable of “the difference between buyer and seller intention”. The research period is from January 2, 2002 to December 11, 2009, with daily data of 1975. It is shown that there is a significant and positive impact between the level of market capital, the level of buyer intention, and the difference between buyer and seller intention, with the first power of the rate of returns of the intraday WSI. There is at least one coefficient less than zero at the high-order term. The bid-ask orders at market opening can be a reference when investors analyze intraday closing prices.

A RELEVANCE VECTOR MACHINE WITH ROUGH SET THEORY MODEL IN ANALYZING THE LIFE CYCLE OF NEW ECONOMIC FIRMS

The subprime mortgage crisis and subsequent financial tsunami have raised considerable concerns about financial risk management and evaluation. This is nowhere more apparent than in new economic firms (NEFs) with large economic targets and heavy R&D expenses, such as firms in the electronics industries. With its potential for extreme growth and superior profitability, the electronic industries in Taiwan have been in the financial stock market spotlight. Recently, the rele- vance vector machine (RVM) was reported to have considerably less computation complexity than support vector machines (SVM) models, since it uses fewer kernel functions. Another emerging technique is rough set theory (RST), which derives rules from data. Based on the corporation life cycle theory (CLC), this study de- veloped a relevance vector machine with rough set theory (RVMRS) to predict the status of a corporation in the decline stage. To demonstrate the performance of the designed RVMRS model, the study used electronic industries data from the Taiwan Economic Journal data bank, Taiwan Security Exchange, and Securities and Futures Institute in Taiwan. Experimental results revealed that the presented RVMRS model can predict the decline stage in a firm's life cycle with satisfactory accuracy, and generate rules for investors, managers, bankers and regulators that enable them to make suitable judgments. In addition, this study proved that the transparency and information disclosure index (TDI) is crucial to predicting the financial decline of corporations.