Assessing the determinants of capital structure: Real Estate Investment Trusts (REITs) listed in Bursa Malaysia

Capital structure refers to how a corporation finances its assets through some combination of equity, debt or hybrid securities. It is primarily comprised of long-term debt, preferred stock and net worth. It also can be quantified by taking how much of each financing a company holds as a percentage of all its financing. Most companies raise funds through equity or debt. This study focused on the determinants of capital structure for the properties and real estate investment trust (REITs) companies listed in Bursa Malaysia. Using trade-offs and pecking order theories as theoretical background, 18 sample firms were analyzed. The data was collected for ten years (2013 – 2022). Leverage was used as the dependent variable, and six market variables were used as independent variables for the analysis: growth opportunities, profitability, size of the firm, tangibility, volatility and liquidity. The result of multiple linear regression found that profitability, size of the firm, tangibility, volatility and liquidity were determinants of the capital structure of Real Estate Investment Trust (REITs) in Malaysia. It appears that less profitable, larger, more tangible, less volatile, and less liquid firms are more likely to have higher leverage levels.