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Capital Structure and Firm Characteristics: Some Evidence from Malaysian Companies

Author

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  • Suhaila, Mat Kila
  • Wan Mahmood, Wan Mansor
Abstract
This study tests the determinants of capital structure for the firms listed in the Bursa Malaysia Securities Berhad (BMSB) market during the six year period from 1999 through 2005. The financial statements of 17 companies with numbers of observations totaling 102 are used. We use dependent variable of debt ratio and is expressed by total debt divided by total assets while the independent variables are size, growth, liquidity and interest coverage ratio. Applying pooled OLS estimations, the result shows that the size, liquidity and interest coverage ratio is significantly negatively related to total debt. However, the study finds insignificant negative relation between capital structure and growth of the firm, expressed by the annual changes of earnings. The results also reveal that there is significant different in capital structure among firms that adopt more debt (more than 30 per cent of their total assets) and those which employ less leverage financing.

Suggested Citation

  • Suhaila, Mat Kila & Wan Mahmood, Wan Mansor, 2008. "Capital Structure and Firm Characteristics: Some Evidence from Malaysian Companies," MPRA Paper 14616, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:14616
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    References listed on IDEAS

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    Cited by:

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    2. Attiya Yasmin Javid & Qaisar Imad, 2012. "A Decomposition Analysis of Capital Structure: Evidence from Pakistan’s Manufacturing Sector," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 17(1), pages 1-31, Jan-June.
    3. Maziar Ghasemi & Nazrul Hisyam Ab Razak* & Komeil Dehghani, 2018. "Determinants of Debt Structure in Ace Market Bursa Malaysia: A Panel Data Analysis," The Journal of Social Sciences Research, Academic Research Publishing Group, pages 390-395:6.
    4. Richard Arhinful & Mehrshad Radmehr, 2023. "The Impact of Financial Leverage on the Financial Performance of the Firms Listed on the Tokyo Stock Exchange," SAGE Open, , vol. 13(4), pages 21582440231, November.
    5. Dejan Malinić & Ksenija DenÄ ić-Mihajlov & Ema Ljubenović, 2013. "The Determinants of Capital Structure in Emerging Capital Markets: Evidence from Serbia," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 98-119.
    6. Faaza Fakhrunnas & Wulan Dari & Mustika Noor Mifrahi, 2018. "Macroeconomic effect and risk-taking behavior in a dual banking system," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 10(2), pages 165-176.
    7. Md. Faruk Hossain & Md. Ayub Ali, 2012. "Impact of Firm Specific Factors on Capital Structure Decision: An Empirical Study of Bangladeshi Companies," International Journal of Business Research and Management (IJBRM), Computer Science Journals (CSC Journals), vol. 3(4), pages 163-182, August.
    8. Siti Nur Aqilah Ab Wahab & Nur Ainna Ramli, 2014. "The Determinants of Capital Structure: An Empirical Investigation of Malaysian Listed Government Linked Companies," International Journal of Economics and Financial Issues, Econjournals, vol. 4(4), pages 930-945.
    9. Gbalam Peter Eze & Ekokeme, Tamaroukro Timipere, 2020. "Effect of Financial Structure and Macroeconomic Fundamentals on Firm Profitability," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 7(2), pages 114-122, February.
    10. Faaza Fakhrunnas & Wulan Dar & Mustika Noor Mifrahi, 2018. "Macroeconomic effect and risk-taking behavior in a dual banking system," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 10(2), pages 165-176, Oktober.
    11. Ines Chaabouni & Anis Jarboui, 2016. "Effect of board`s skills on stakeholder value," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 6(4), pages 84-100, April.
    12. Maziar Ghasemi & Nazrul Hisyam Ab Razak, 2016. "The Impact of Liquidity on the Capital Structure: Evidence from Malaysia," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(10), pages 130-139, October.
    13. Norliza Che-Yahya & Nor Akila Mohd Kassim & Nur Afiqah M. Rasit & Nursyazwina Zainal Abidin & Erni Nazirah Shahrel & Norizzanie Wajihah Zulkefli & Nurliyana Zalani & Atirah Abd Latif & Siti Sarah Alya, 2024. "Determinants of Capital Structure from Malaysian Shariah-Compliant Food and Beverages Firms," Information Management and Business Review, AMH International, vol. 16(1), pages 76-93.

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    More about this item

    Keywords

    Capital structure; firm characteristics; leverage financing; Bursa Malaysia;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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