Hafezali  Iqbal Hussain, H. Obsatar  Sinaga, M. Haizam  M Saudi, Firdaus  Hilmi Nadzri, Nur Surayya  M. Saudi, Mohd  Nazrul Azizi, Mohd Farid  Shamsudin, 
    Capital Structure Speed of Adjustment and Shari’ah Compliance:
Empirical Evidence from Malaysia,
    Journal of Engineering and Applied Sciences,
    Volume 13,Issue 8,
    2018,
    Pages 2103-2107,
    ISSN 1816-949x,
    jeasci.2018.2103.2107,
    (https://makhillpublications.co/view-article.php?doi=jeasci.2018.2103.2107)
    Abstract: The study empirically tests the speed of adjustment of a sample of Malaysian firms. We find that
Shari’ah compliance influences the speed of adjustment implying that cost of capital for Shari’ah compliant
firms differ from non-compliant firms. Our tests further show that Shari’ah compliant companies whose leverage
leves are above target tend to adjust more rapidly to target levels than non-compliant firms. The evidence
provides an opposite conclusion on firms below target levels. The findings provide a notion of debt versus
equity choice for Shari’ah compliant firms versus non-compliant firms indicating that preference is guided by
implied cost of capital which differs based on the extent of current leverage levels.
    Keywords: Capital structure;speed of adjustment;Shari`ah compliance;Islamic finance;notion;firms