Determinants of capital structure: Empirical evidence from Shariah compliant plantation firms in Malaysia / Mohamad Nizam Jaafar … [et al.]

Jaafar, Mohamad Nizam and Muhamat, Amirul Afif and Ahmad, Ismail and Syed Alwi, Sharifah Faigah (2017) Determinants of capital structure: Empirical evidence from Shariah compliant plantation firms in Malaysia / Mohamad Nizam Jaafar … [et al.]. Journal of Emerging Economies & Islamic Research, 5 (4). pp. 1-9. ISSN 2289-2559

Abstract

Capital structure choice is vital in corporate financial management due to its effect on both return and risk to investors. As such, the objective of this research is to analyse the capital structure of listed shariah compliant plantation companies in Bursa Malaysia. The factors that influence the level of debt in this research are profitability, tangibility and liquidity respectively. The research is conducted by observing financial data of 34 listed shariah compliant plantation firms in Malaysia from period 2006 to 2016. The study has used panel data and the regression analysis is based on ordinary least square (OLS). Capital structure is the dependaple variable referring to debt ratio of the companies, decomposed into total debts over total assets. The independent variables are profitability, liquidity and tangibility. Three theories of capital structure have guided this study i.e. the Trade-Off Theory, Asymmetric Information and the Pecking Order Theory. The study shows that profitability and tangibility have significant positive relationship capital structure. Nevertheless, liquidity does not have any significant relationship with the debt ratio. It is most likely that liquidity is not taken into account by listed plantation companies in Malaysia in making their capital structure decision. Since profitability and tangibility have significant relationship with the level of debt, the Theory of Capital Structure such as Trade Off Theory is applicable to plantation shariah compliant firms listed in Bursa Malaysia.

Metadata

Item Type: Article
Creators:
CreatorsID Num. / Email
Jaafar, Mohamad NizamUNSPECIFIED
Muhamat, Amirul AfifUNSPECIFIED
Ahmad, IsmailUNSPECIFIED
Syed Alwi, Sharifah FaigahUNSPECIFIED
Subjects: H Social Sciences > HJ Public Finance
H Social Sciences > HJ Public Finance > Finance, Islamic
Divisions: Universiti Teknologi MARA, Selangor > Puncak Alam Campus > Faculty of Business and Management
Journal or Publication Title: Journal of Emerging Economies & Islamic Research
Journal: UiTM Journal > Journal of Emerging Economies and Islamic Research
ISSN: 2289-2559
Volume: 5
Number: 4
Page Range: pp. 1-9
Official URL: http://www.jeeir.com/v2/index.php/36-current/2017/...
Item ID: 32239
Uncontrolled Keywords: Capital structure, Plantation sector, Panel data, Ordinary least square (OLS)
URI: http://ir.uitm.edu.my/id/eprint/32239

Download

[img] Text
AJ_MOHAMAD NIZAM JAAFAR JEEIR B 17.pdf

Download (125kB)

Actions (login required)

View Item View Item

Downloads

Downloads per month over past year