The relationship between debt-financing and leverage level of financing companies in Malaysia / Nur Najihah Nor Azalan

The main objective of this study was to investigate the relationship between Debt to Equity, Short Term Leverage, Tangible Asset, Liquidity and Growth towards Financial Debt. The sample of this study were taken from seven (7) listed companies under Bursa Malaysia which are Malayan bank, Cimb bank, Public bank, Rhb bank, Hong Leong bank, Affin bank and Ambank. The data were collected for the period of 10 years, which was from the year 2007 - 2016. In conducting this study, researcher has used Descriptive, Correlation and Regression analysis in order to obtain accurate results for this research. The sample was found to be asymmetric whereas the distribution has heavier tails and a sharper peak than the normal distribution. There was an amount of 31.73% of the dependent variable that was explained by the independent variables used in this study as referred to the R-squared indicator. The study is positively auto-correlated as its value is below 2 and the error terms were found to be not normally distributed. Besides that, GLS was not needed since the error term was homogeneous. The results that were established in correlation were, a significant and positive relationship was discovered between short term leverage and growth with financial debt. On the other hand, there was a negative relationship between debt to equity, tangibles asset and liquidity with financial debt. The results obtained along conducting this study have enhanced our understanding on the factors that affects the leverage level of financing companies in Malaysia.