Capital structure and firm performance: evidence from higher corporate governance compliance firms in Malaysia / Nur Nazahah Semaon

This paper intends to study the determinants of capital structure and firm performance that based on high corporate governance firms in Malaysia which is Top 20 firms listed in Bursa Malaysia, over the 2009-2016 periods. The analysis is based on descriptive statistic, linear and non-linear regression of quadratic and polynomial cube model regressions and also used three scenarios which is overall observation, low corporate governance compliance and high corporate governance compliance on how they manage their capital structure to maximize the performance since in Malaysia there is no previous study have done this. The proxy used to measure firm performance in this analysis is return on asset while the proxy for capital structure used is debt to equity ratio. The result shows that there is negative relationship exist between debt to equity ratio and return on asset. This indicates the firms tend to choose less borrowing in order to maximize their profitability. The theory of Pecking Order is consistent with the finding that has been obtained in this study.