Determinants of capital structure : A comparative study in Malaysia and Indonesia

The study investigates the determinants of the capital structure of 237 manufacturing firms listed in Malaysia and Indonesia stock exchange from 2005-2012. Ordinary least square and fixed effect model have been used to estimate the relationship between firmspecific determinants (firm size, profitabi...

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Main Author:	Hadi, Ahmed Hassan
Format:	Thesis
Language:	eng eng
Published:	2014
Subjects:	HG Finance
Online Access:	https://etd.uum.edu.my/4666/1/s815286.pdf https://etd.uum.edu.my/4666/2/s815286_abstract.pdf
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id	my-uum-etd.4666
record_format	uketd_dc
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Md Rus, Rohani
topic	HG Finance
spellingShingle	HG Finance Hadi, Ahmed Hassan Determinants of capital structure : A comparative study in Malaysia and Indonesia
description	The study investigates the determinants of the capital structure of 237 manufacturing firms listed in Malaysia and Indonesia stock exchange from 2005-2012. Ordinary least square and fixed effect model have been used to estimate the relationship between firmspecific determinants (firm size, profitability, tangibility, non-debt tax shields, liquidity and share price performance) and country-specific determinants (GDP growth, inflation and interest rate). The result suggests that firm-specific and country-specific determinant varies across Malaysia and Indonesia. The results show that firm size, tangibility, and non-debt tax shields are significantly and positively related to overall leverage and longterm leverage, while liquidity and share price performance are negatively related to leverage of Malaysian firms. For Indonesian firms, profitability, tangibility and non-debt tax shields are positively related to overall and long-term leverage, but firm size, liquidity and share price performance are negatively related to overall leverage and long-term leverage. Inflation is positively related to overall leverage under the fixed effect model, interest rate is negatively related to overall leverage, while GDP growth is negatively related with long-term leverage. The results also show that firm-specific factors play an important role in determining the capital structure before and after the 2008 financial crisis. The results of this study support the pecking order theory, the trade-off theory, market timing theory and the agency theory. The study has laid groundwork and detailed explanation about the determinants of capital structure in Malaysian and Indonesian manufacturing firms.
format	Thesis
qualification_name	Master of Philosophy (MPhil)
qualification_level	Master's degree
author	Hadi, Ahmed Hassan
author_facet	Hadi, Ahmed Hassan
author_sort	Hadi, Ahmed Hassan
title	Determinants of capital structure : A comparative study in Malaysia and Indonesia
title_short	Determinants of capital structure : A comparative study in Malaysia and Indonesia
title_full	Determinants of capital structure : A comparative study in Malaysia and Indonesia
title_fullStr	Determinants of capital structure : A comparative study in Malaysia and Indonesia
title_full_unstemmed	Determinants of capital structure : A comparative study in Malaysia and Indonesia
title_sort	determinants of capital structure : a comparative study in malaysia and indonesia
granting_institution	Universiti Utara Malaysia
granting_department	Othman Yeop Abdullah Graduate School of Business
publishDate	2014
url	https://etd.uum.edu.my/4666/1/s815286.pdf https://etd.uum.edu.my/4666/2/s815286_abstract.pdf
_version_	1747827776805666816
spelling	my-uum-etd.46662022-05-23T01:13:29Z Determinants of capital structure : A comparative study in Malaysia and Indonesia 2014 Hadi, Ahmed Hassan Md Rus, Rohani Othman Yeop Abdullah Graduate School of Business Othman Yeop Abdullah Graduate School of Business HG Finance The study investigates the determinants of the capital structure of 237 manufacturing firms listed in Malaysia and Indonesia stock exchange from 2005-2012. Ordinary least square and fixed effect model have been used to estimate the relationship between firmspecific determinants (firm size, profitability, tangibility, non-debt tax shields, liquidity and share price performance) and country-specific determinants (GDP growth, inflation and interest rate). The result suggests that firm-specific and country-specific determinant varies across Malaysia and Indonesia. The results show that firm size, tangibility, and non-debt tax shields are significantly and positively related to overall leverage and longterm leverage, while liquidity and share price performance are negatively related to leverage of Malaysian firms. For Indonesian firms, profitability, tangibility and non-debt tax shields are positively related to overall and long-term leverage, but firm size, liquidity and share price performance are negatively related to overall leverage and long-term leverage. Inflation is positively related to overall leverage under the fixed effect model, interest rate is negatively related to overall leverage, while GDP growth is negatively related with long-term leverage. The results also show that firm-specific factors play an important role in determining the capital structure before and after the 2008 financial crisis. The results of this study support the pecking order theory, the trade-off theory, market timing theory and the agency theory. The study has laid groundwork and detailed explanation about the determinants of capital structure in Malaysian and Indonesian manufacturing firms. 2014 Thesis https://etd.uum.edu.my/4666/ https://etd.uum.edu.my/4666/1/s815286.pdf text eng public https://etd.uum.edu.my/4666/2/s815286_abstract.pdf text eng public mphil masters Universiti Utara Malaysia Afza, T., & Hussain, A. (2011). Determinants of capital structure across selected manufacturing sectors of Pakistan. International Journal of Humanities and Social Sciences, 1(12) 254-262. Arsiraphongphisit, Kester, G., & Skully, M. (2000). Financial policies and practices of listed firms in Thailand: capital structure, capital budgeting, Cost of capital, and dividends. Journal of Business Administration, 23, 72-93. Al-najjar, B., & Taylor, P. (2008). The relationship between capital structure and ownership structure: New evidence from Jordanian panel data. Journal of Managerial finance, 34 (12), 919–933. Antoniou, A., & Paudyal, K. 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Determinants of capital structure : A comparative study in Malaysia and Indonesia

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