An empirical analysis of capital structure decisions in Malaysian listed companies

Nur Azura Sanusi, . and Roshaiza Taha, . An empirical analysis of capital structure decisions in Malaysian listed companies. pp. 65-73. ISSN 1823-8556

This paper attempts to analyze the effect of corporate tax to the firms capital structure. The study uses the sample of Malaysian firms that are listed in the Bursa Malaysia. We exploit a time series and cross sectional data of 35 companies over 2007-2012 and build an empirical model based on proceeding literature. These data then are used to examine the effects of several explanatory variables i.e. corporate tax bankruptcy cost return on assets and several controlled variables on firm capital structure decision. The results showed that the significant of corporate tax is consistent with the theory that firms are subjected to lower corporate tax rates which would lead them to employ more debt in their capital structures. Several policy implications can be derived: first the financial structure should be designed with the emphasis on the role of bank centered and second the importance of firms-characteristics to capital structure might induce the regulators to strengthen the governance characteristics of firms. In addition there is also a need to examine the impact of monetary policy on the firm behavior.

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Abstract

This paper attempts to analyze the effect of corporate tax to the firms capital structure. The study uses the sample of Malaysian firms that are listed in the Bursa Malaysia. We exploit a time series and cross sectional data of 35 companies over 2007-2012 and build an empirical model based on proceeding literature. These data then are used to examine the effects of several explanatory variables i.e. corporate tax bankruptcy cost return on assets and several controlled variables on firm capital structure decision. The results showed that the significant of corporate tax is consistent with the theory that firms are subjected to lower corporate tax rates which would lead them to employ more debt in their capital structures. Several policy implications can be derived: first the financial structure should be designed with the emphasis on the role of bank centered and second the importance of firms-characteristics to capital structure might induce the regulators to strengthen the governance characteristics of firms. In addition there is also a need to examine the impact of monetary policy on the firm behavior.

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Item Type:	Article
AGROVOC Term:	Capital
AGROVOC Term:	Assets
AGROVOC Term:	Companies
AGROVOC Term:	Debt
AGROVOC Term:	Bankruptcy
AGROVOC Term:	Models
AGROVOC Term:	Data analysis
AGROVOC Term:	Profitability
AGROVOC Term:	Taxes
AGROVOC Term:	Monetary policies
Geographical Term:	Malaysia
Depositing User:	Ms. Suzila Mohamad Kasim
Last Modified:	28 Apr 2025 07:09
URI:	http://webagris.upm.edu.my/id/eprint/24233

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