The determinants of capital structure on construction companies sector in Malaysia

This study investigate the determinants of capital structure in construction companies sectors in Malaysia which are listed in the Bursa Malaysia. Therefore, the purpose of this study is to have a clear view on the relationship between the dependent variable of Debt Ratios and independent variables of Profitability, Size, Asset Tangibility and Liquidity of the construction sector companies used in this study and find the factors that affect the capital structure decision. Thus, this research wants to investigate and help managers to determine a good capital structure decision in running their business. There is 17 sample data derived from the construction companies with eight-year period from 2007 to 2014 which make the total number of observation at 136. The samples included based on the availability and continuity of the data on companies published financial statements found in Data Stream Professional during the period of 2007 until 2014. The data has been analyzed by using Eviews 8.0 to do descriptive, regression and correlation analysis. Using panel data method, the findings indicate that Size and Liquidity are significant in explaining the debt ratio of the construction sector companies in Malaysia and Size is the dominant factor that affects decision of capital structure while, Probability and Asset Tangibility has no significant relationship with Debt Ratios.