Relationship between debt financing and firm performance / Nastaasa Mohd Ali

Since the late 1950s, the past theoretical and empirical studies have addressed the relationships between capital structure and firm performance. The main conflicts of interest are between shareholders and creditors. As the management and ownership are not separated in the vast majority of small firms, so this study is aimed the relationship between debt financing and firm performance. The relationship between debt financing and firm performance is a decisive and commonly discussed issue in managerial finance. The purpose of this study is to examine the relationship between debt level and performance of random top five construction companies that are listed in the Bursa Malaysia, whether it is give directly or indirectly affect the firm performance in term of profitability. For the empirical work, this study will be used data from the financial ratios of the firm. Independent variable to be used in this research is account payable (AP), short term debt (STD) and long term debt (LTI)). For the dependent variable to represent the firm performance is return on assets (ROA). This research will gather the data from the datastream and in this research are using 10 years financial report of the firm from 2006-2015. Sample for this research are more focus on construction company and using panel by using multiple linear regression.