International Business Management
ISSN: OnlineISSN: Print 1993-5250
Abstract
As an indicator that gives impact to the long term performance of a company in term of its profit and valuation, financial leverage has been extensively investigated. This study analyzes the determinants of financial leverage for a panel of 54 industrial product sector companies listed in the Busar Malaysia, as they contribute 41.5% of Malaysia Gross Domestic Product (GDP). The debt ratio has been proxies for leverage. The dynamic tests are performed for a period of 2006-2014 using STATA 10. The empirical results reveal that liquidity, firm size and tangibility are negatively and significantly associated with leverage while profitability is positively and insignificantly related. These signs suggest that two capital structure theories are at work. Even though the explanatory variables selected are all internal factors with the exception for profitability, they all have a high influence on the industrial product companies’ capital structure.
How to cite this article:
Che Wan Khalidawaty Khalid, Nor Jana Salim and Juliana Mohd Nor. Determinants of Financial Leverage for a Panel Data of Industrial Product Sector in Malaysia.
DOI: https://doi.org/10.36478/ibm.2017.41.46
URL: https://www.makhillpublications.co/view-article/1993-5250/ibm.2017.41.46