Capital Structure Determinants of Bursa Malaysia PN17 Firms

Izdihar Baharin and Ilham Sentosa
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Izdihar Baharin: UOW Malaysia KDU Penang
Ilham Sentosa: Kuala Lumpur Business School

A chapter in Board Diversity and Corporate Governance, 2024, pp 433-444 from Springer

Abstract: Abstract The study on the determinants of capital structure had been done extensively both in Malaysia and globally. However, there seems to be a gap in this area of study for Malaysian financially distressed public firms. The intention of this study is to plug the gap, especially in the Malaysian capital market environment, both in terms of sample and data analysis. This study employed the PLS methodology, which is another gap in itself, as its main data analysis technique, using the WrapPLS software. The main issue of this chapter is to investigate whether there are indicators (determinants) for pre- and post-reorganization PN17 firms in Bursa Malaysia. A total of 49 sample firms were selected from a population of 155 firms across the period of five years for both the pre- and post-reorganization firms analysis in order to control for inconsistent behaviour among the firms. The study showed that there are reliable determinants to indicate companies are having financial distress up to two years before it happens and an indicator showing that the company had successfully reorganized its capital structure, one year after the financially distressed firms exit the PN17 status. In general, this study found that Bursa Malaysia PN17 firms support the behaviour of the static trade-off theory and the PN17 status is effective in achieving its objective.

Keywords: Determinants; Capital structure; Financial distress; Partial Least Square; PN17 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:csrchp:978-3-031-53877-3_33

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DOI: 10.1007/978-3-031-53877-3_33

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