Corporate Leverage Decisions in Malaysian Property Sector: Before and During Pandemic

Thng Peck-Ern Casandra and Wei-Theng Lau
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Thng Peck-Ern Casandra: School of Business and Economics, Universiti Putra Malaysia, Malaysia
Wei-Theng Lau: School of Business and Economics, Universiti Putra Malaysia, Malaysia

International Journal of Research and Innovation in Social Science, 2023, vol. 7, issue 12, 1719-1733

Abstract: Financial constraints and leverage decisions have challenged the survival and expansion of property businesses, especially during unfavorable economic conditions. This study aims to investigate the factors of corporate leverage in the Malaysian property sector from 2015 to 2021, covering the coronavirus disease (COVID-19) pandemic. The sample size of this study consists of 55 top-listed property companies in Bursa Malaysia. Six pre-determined factors from the current literature include profitability, firm size, tangibility of assets, liquidity, growth opportunities and non-debt tax shields. On top of the full-period test, this paper examines the possible changes in the relationship before and during the COVID-19 pandemic. Overall, our panel data analysis shows that firm size and growth opportunities significantly positively affect leverage, while liquidity negatively correlates with leverage. In our sample, profitability and non-debt tax shields do not exhibit significant roles in the relationship with corporate leverage. Our conclusion is robust across the periods of study and regression models. It contributes updated empirical evidence to the already scarce studies of financing decisions in the sector, which plays a crucial role in driving the nation’s economic growth.

Date: 2023
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