Firms’ Specific Determinants of Capital Structure: An Analysis into Construction Firms in Malaysia and Singapore

2021 ◽  
Vol 7 ◽  
pp. 76-91
Author(s):  
Siti Zulaikha Binti Upilin ◽  
Hapsah S.Mohammad
Keyword(s):  
Capital Structure ◽  
Firm Size ◽  
Small Sample Size ◽  
Panel Data Analysis ◽  
Agency Cost ◽  
Small Sample ◽  
The Body ◽  
Construction Firms ◽  
The Impact ◽  
The Capital Structure

The study aims to examine the firm-specific factors such as firm size, profitability and asset tangibility in the capital structure decisions (leverage) on a sample of twenty construction firms in Malaysia and Singapore from 2009 to 2018, with 200 observations. The sample firms are chosen based on convenience sampling technique and the availability of the data. Prior studies documented inconclusive findings on the determinants of capital structure and different industries tend to reveal different patterns of relationship. In addition, the empirical evidence on comparative analysis between construction firms in Malaysia and Singapore is lacking. Hence, the objective of this study is to extend the prior work by investigating the impact of the determinants on capital structure on the construction firms in Malaysia and Singapore. The study uses panel data analysis to test the effectivity of trade-off, pecking order and agency cost theories of capital structure. The empirical findings reveal positive and significant association between firm size and capital structure for Singapore firms. Meanwhile, profitability and asset tangibility correlate negatively with capital structure. As for Malaysian firms, the three determinants exhibit insignificant association with the capital structure. The study only examines 10 construction firms in Malaysia and 10 construction firms in Singapore, therefore, the small sample size becomes the limitation of the study. Nevertheless, the findings of this study may contribute to the body of knowledge on the importance of some firm-specific determinants such as profitability, tangible assets, and firm size in order to determine the optimal level of capital structure for firms in these countries.

Firms’ Specific Determinants of Capital Structure: An Analysis into Construction Firms in Malaysia and Singapore

2020 ◽  
Vol 7 (1) ◽  
pp. 76-91
Author(s):  
Siti Zulaikha Upilin ◽  
Hapsah S.Mohammad
Keyword(s):  
Capital Structure ◽  
Firm Size ◽  
Small Sample Size ◽  
Panel Data Analysis ◽  
Agency Cost ◽  
Small Sample ◽  
The Body ◽  
Construction Firms ◽  
The Impact ◽  
The Capital Structure

The study aims to examine the firm-specific factors such as firm size, profitability and asset tangibility in the capital structure decisions (leverage) on a sample of twenty construction firms in Malaysia and Singapore from 2009 to 2018, with 200 observations. The sample firms are chosen based on convenience sampling technique and the availability of the data. Prior studies documented inconclusive findings on the determinants of capital structure and different industries tend to reveal different patterns of relationship. In addition, the empirical evidence on comparative analysis between construction firms in Malaysia and Singapore is lacking. Hence, the objective of this study is to extend the prior work by investigating the impact of the determinants on capital structure on the construction firms in Malaysia and Singapore. The study uses panel data analysis to test the effectivity of trade-off, pecking order and agency cost theories of capital structure. The empirical findings reveal positive and significant association between firm size and capital structure for Singapore firms. Meanwhile, profitability and asset tangibility correlate negatively with capital structure. As for Malaysian firms, the three determinants exhibit insignificant association with the capital structure. The study only examines 10 construction firms in Malaysia and 10 construction firms in Singapore, therefore, the small sample size becomes the limitation of the study. Nevertheless, the findings of this study may contribute to the body of knowledge on the importance of some firm-specific determinants such as profitability, tangible assets, and firm size in order to determine the optimal level of capital structure for firms in these countries.

scholarly journals The Impact of Financial Crisis on the determinants of Capital Structure among Shariah Constructions Firms

2019 ◽  
Vol 4 (2) ◽  
pp. 46
Author(s):  
Mohamad Nizam Jaafar ◽  
Amirul Afif Muhamat ◽  
Norzitah Abdul Karim ◽  
Sharifah Faigah Syed Alwi ◽  
Noraini Binti Peie
Keyword(s):  
Financial Crisis ◽  
Capital Structure ◽  
Firm Size ◽  
Free Cash Flow ◽  
Debt Ratio ◽  
Construction Firms ◽  
Construction Companies ◽  
Tangible Asset ◽  
The Impact ◽  
The Capital Structure

The aim of this empirical study is to explore the factors that affect the capital structure of construction firms and to investigate whether the capital structure models derived from Western settings provide convincing explanations for capital structure decisions of the Malaysia firms. This study focuses on Shariah compliant construction companies since this industry has been contributing significantly towards Malaysia economic growth. In addition, this study also includes the impact of financial crisis towards firms’ capital structure decision. Panel data from 11 Shariah compliant construction companies in Malaysia were analyzed for duration of 17 years (2001-2017). Different conditional theories of capital structure are reviewed i.e. trade‐off theory, pecking order theory, agency theory, and theory of free cash flow, in order to formulate testable propositions concerning the determinants of capital structure of the construction firms. The dependent variable that being used is debt ratio, while independent variables are firm size, profitability, tangible asset, growth opportunity, liquidity, and crisis respectively. Finding indicates that firm size, profitability and tangible asset are significant towards debt ratio. However, other variables including financial crisis did not have any significant impact on capital structure decision. The results of this study provide important implication to investors and manager of firms in making best decision on capital structure. This study also adds values to the existing knowledge regarding determinants of capital structure and financial crisis.

Integrated reports, external assurance and financial performance

2019 ◽  
Vol 11 (2) ◽  
pp. 317-350 ◽  
Author(s):  
Orhan Akisik ◽  
Graham Gal
Keyword(s):  
Financial Performance ◽  
North American ◽  
Small Sample Size ◽  
Panel Data Analysis ◽  
Small Sample ◽  
Global Reporting Initiative ◽  
Significant Positive Association ◽  
Content Type ◽  
Corporate Websites ◽  
The Impact

Purpose The purpose of this paper is to examine the relationship between integrated reports, external assurance and financial performance for North American firms between 2011 and 2016. Design/methodology/approach Corporate websites were examined for disclosures which included both financial and non-financial information. Compustat North America and Global Reporting Initiative (GRI) websites provided additional data for the analysis. Findings Using a panel data analysis, the results provide evidence that there is a significant positive association between integrated reports and multiple measures of financial performance. Moreover, this positive effect is enhanced when integrated reports are assured by accounting firms. Research limitations/implications There are relatively a small number of firms that do this kind of reporting. A major limitation of the study is the small sample size. Practical implications As stakeholders find information in integrated reports relevant, there needs to be standardization on their content and level of assurance. Standard setters and regulators should be involved in setting these standards and assurance guidelines. Social implications Although it is clear that there is a cost to firms which produce integrated reports, the benefits to society may outweigh these costs. This may go beyond the benefits to shareholders as they make investment decisions. Originality/value According to the knowledge of the authors, this is the first study that examines the impact of integrated reports and external assurance on financial performance for North American firms.

scholarly journals The Effect of Firm Size and Profitability on Firm Value with Capital Structure as Intervening Variables in Indonesia

2019 ◽  
Vol 4 (2) ◽  
pp. 55
Author(s):  
Indra Arifin Djashan
Keyword(s):  
Capital Structure ◽  
Firm Size ◽  
Firm Value ◽  
Stock Exchange ◽  
Company Performance ◽  
Purposive Sampling ◽  
The Impact ◽  
The Relationship ◽  
Intervening Variables ◽  
The Capital Structure

This study examines the impact of firm size and profitability on firm value with capital structure as an intervening variable in financial companies listed on the Indonesia Stock Exchange during three years. The method used for sampling is purposive sampling based on predetermined criteria. The number of samples in this study were 73 companies. Measurement of profitability is using ROA and ROE as one indicator to see company performance. The main purpose of companies that have gone public is to increase the prosperity of the owners or shareholders through increasing the value of the company. The results showed that the improvement of profitability and firm size may improve its capital structure. The improvement of profitability and the firm size may increase significantly the firm value. The results of mediating test showed that the capital structure is not able to mediate the relationship between the profitability and firm size to firm value

scholarly journals PENGARUH PEMBIAYAAN SYARIAH TERHADAP PENGUATAN MODAL UKM DI KOTA KENDARI

2018 ◽  
Vol 5 (1) ◽  
pp. 17
Author(s):  
Sitti Zakiah Ma’Mun ◽  
Siti Maesaroh
Keyword(s):  
Capital Structure ◽  
Small And Medium Enterprises ◽  
Small Sample Size ◽  
Sampling Technique ◽  
Small Sample ◽  
Islamic Finance ◽  
Cluster Sampling ◽  
Strategic Role ◽  
Medium Enterprises ◽  
The Capital Structure

Small and Medium Enterprises ( SMEs ) have a strategic role in economic development , on the other hand the inability of the SME sector in terms of capital constraints in increasing its production capabilities . Therefore the aim of this study wanted to determine the effect of strengthening the capital of Islamic finance to SMEs .The study site is located in the city of Kendari with a relatively small sample size ( 30 -50 ) are listed on the SME and SME Perindagkop Kendari . Sampling technique using a cluster sampling is sampling based on a predetermined area . with Islamic finance as the dependent variable and the capital structure of SMEs as an independent variable . Regression analysis is used as an analytical tool to determine the relationship and the influence of financing on the capital structure of SMEs , in order to improve the ability of capital ( capital gain ) . Results showed that the Syariah Financing affect the capital structure of SMEs in Kendari .

scholarly journals Capital Structure Choice in SMEs: Evidence from Kazakhstan

2019 ◽  
Vol 2 (2) ◽  
pp. 77-87
Author(s):  
Samal Kokeyeva ◽  
Ainagul Adambekova
Keyword(s):  
Capital Structure ◽  
Panel Data Analysis ◽  
Empirical Studies ◽  
Economic Activities ◽  
Industry Group ◽  
Factors Influencing ◽  
Industry Affiliation ◽  
The Impact ◽  
The Capital Structure

Background - The article examines the factors influencing the decision on the company's capital structure. Along with the standard factors of the company, we also analyze the impact of the industry affiliation of the company on its capital structure. Purpose - to test standard firm factors and industry affiliation of firms affecting the capital structure of SMEs. Design/Methodology/Approach – the non-financial firms in Kazakhstan with all types of economic activities for 2015-2018 under consideration. In order to study the determinants of capital structure such as asset tangibility, size, growth, liquidity, profitability across the industry group of SMEs for non-financial SMEs in Kazakhstan the authors use panel data analysis. Findings - The results indicate that the main factors influencing the process of capital structure management in Kazakhstan SMEs are asset tangibility, size and profitability.  It was confirmed that sectoral implications also affect the long-term debt and total debt of SMEs. Research limitation - it is necessary to provide further research concerning this topic. It is needed to study the capital structure of SMEs in the long term and across multiple countries, which will give us a more accurate concept of decisions on the capital structure taken in companies. Originality/value - the study of capital structure determinants of SMEs in Kazakhstan was not conducted yet. The empirical analysis in many aspects gives the same results as other related studies in emerging markets.  However, the size has a negative relation to the capital structure, which does not correspond to most empirical studies. 

scholarly journals PENGARUH CAPITAL STRUCTURE DAN FIRM SIZE TERHADAP AGENCY COST DAN KINERJA KEUANGAN

2019 ◽  
Vol 9 (1) ◽  
Author(s):  
Poppy Pujawati ◽  
Ni Ketut Surasni
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Firm Size ◽  
Indirect Effect ◽  
Agency Cost ◽  
Normality Test ◽  
The Capital Structure

This research is aimed at examining the effect of capital structure and firm size on agencycost and financialperformanceofMiscellaneous Industrywhich listed in BEI. The populations of this research were all Miscellaneous Industrywhich listed in BEI.Sampling was conducted using a purposivesampling method so that in this research the number ofsamples were 23 companies in the 2013-2017 period.Testing classic assumptions include normality test, multicollinearity test, heteroscedasticity test, and autocorrelation test. The collected data werethen analyzed with path analysisusing SPSSprogram and Sobel test. The research showed that there is an influence of the firm size tested has an effect on agency cost, while the capital structure has not an effect on agency cost. There is an influence of firm size, and agency cost on financial performance, while the capital structure has not an effect on the financialperformance. There is an indirect effect of firm size on financial performance through agency cost as an intervening variable.Keywords: Capital Structure, Firm Size, Agency Cost, Financial Performance.

scholarly journals CAPITAL STRUCTURE, PROFITABILITY AND FIRM VALUE: EVIDENCE FROM MINING COMPANIES

2018 ◽  
Vol 4 (1) ◽  
pp. 1-12
Author(s):  
Diga Cendekia Budianto ◽  
Yosman Bustaman
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Firm Size ◽  
Firm Value ◽  
Control Variable ◽  
Total Asset ◽  
Revenue Growth ◽  
Mining Companies ◽  
The Impact ◽  
The Capital Structure

This research investigates the impact of firm capital structure on profitability and firm value of the twenty eight mining companies listed in Indonesia Stock Exchange from the year 2009 to 2013. The capital structure is measured by the proportion of debt over total asset, ROA and ROE are used to measure the firm profitability, meanwhile stock price is applied to measure firm value. This study uses panel data regression analysis. After controlling with external factor such as GDP rate and inflation rate, and internal factor such as revenue growth and firm size (total asset), we find leverage has negative impact on ROA however they are not significant, thus it could be said capital structure has no effect on financial performance. The indicators that significantly affect financial performance come from the control variable, which is revenue growth. Our research also finds that the capital structure has a significant effect towards firm value. The firm size and GDP rate is more impactful towards firm value. This contradicts with the MM’s capital structure irrelevance proposition, but supports other theories such as pecking order theory and Trade-off theory

scholarly journals The Impact of the Financial Performance on Capital Structure of Insurance Industry in Egypt

2021 ◽  
Vol 14 (7) ◽  
pp. 103
Author(s):  
Salah Mohamed Eladly
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Significant Relationship ◽  
Return On Investment ◽  
Insurance Industry ◽  
Panel Data Analysis ◽  
Return On Equity ◽  
Study Results ◽  
The Impact ◽  
The Capital Structure

This paper attempts to investigate the impact of the profitability and liquidity on capital structure of insurance industry in Egypt as applied on a sample of (19) insurance firms represented in the Egyptian insurance industry over the period from 1999-2019. The capital structure is measured by debt ratio, and the financial performance is measured by (liquidity, return on equity, and retune on investment).The study results show that there are significant negative linear relationships between the independent variable in terms of return on equity (X1), return on investment (X3), and dependent variable for the capital structure (Y) at the level of significant less than (0.001); based on panel data analysis, the results show that Tau-statistic, and z-statistic, are at a significant level less than (0.05).The statistical conclusion is the null significant relationship between the capital structure and liquidity, while there is a significant relationship between the capital structure, return on equity, and return on investment. The results  also show that the R2 for the independent variables are accepted in the model (capital structure Y, lag Y1, return on equity X1, liquidity X2, and return on investment) by (79.3%) from total variation of capital structure (Y).

Analysis of Factors Affecting Capital Structure in Food and Beverage Manufacturing Company

2018 ◽  
Vol 1 (2) ◽  
pp. 1-14
Author(s):  
Nur Hajja Aini ◽  
St Habibah
Keyword(s):  
Capital Structure ◽  
Firm Size ◽  
Significant Influence ◽  
Fixed Effects ◽  
Random Effect Model ◽  
Manufacturing Companies ◽  
Business Risk ◽  
Growth Opportunities ◽  
Food And Beverage ◽  
The Capital Structure

The purpose of this research to analyze the influence of firm size, liquidity, growth opportunities, tangibility asset, and business risk to the capital structure of listed food and beverage manufacturing companies in Indonesia and Vietnam Stock Exchange from 2010 to 2016. The result shows that the fixed effects model should be appropriate for this study as compared to the random effect model. Capital structure significantly differences between the two countries. Firm size has a positive but insignificant influence on the capital structure in Indonesia, whereas it has a positive and a significant influence on the capital structure in Vietnam. Liquidity has a negative and significant influence on the capital structure both in Indonesia and Vietnam. Growth opportunities have a negative but insignificant influence on the capital structure both in Indonesia and Vietnam. Asset tangibility has a positive but insignificant influence on the capital structure in Indonesia, but it has the negative but insignificant influence on the capital structure in Vietnam. Ultimately, the business risk has a negative and significant influence on the capital structure in Indonesia but has a positive and insignificant influence on the capital structure in Vietnam.

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