The Determinants of Capital Structure: Evidence from Malaysian Companies

Chin Fei Goh (Faculty of Management, Universiti Teknologi Malaysia)
Wan Ying Tai (Faculty of Management, Universiti Teknologi Malaysia)
Amran Rasli (Faculty of Management, Universiti Teknologi Malaysia)
Owee Kowang Tan (Faculty of Management, Universiti Teknologi Malaysia)
Norhayati Zakuan (Faculty of Management, Universiti Teknologi Malaysia)

International Journal of Supply Chain Management
Vol 7, No 3 (2018): International Journal of Supply Chain Management (IJSCM)

The aim of this study is to investigate the determinants of capital structure for Malaysian manufacturing companies. The studied subjects were 174 Malaysia manufacturing companies listed on Bursa Malaysia from year 2011 to year 2014. Firm fixed-effect with robust standard was used in data analysis to address the potential heterogeneity and endogeneity that arise from panel data. The analysis shows that firm profitability and non-debt tax shield are negatively related to firm leverage. On the other hand, several corporate governance mechanisms, namely, ownership concentration, separation of CEO-chairs, board independence, are not related to firm leverage. Liquidity, firm size and asset structure are also not related to firm leverage of manufacturing firms.