SURVIVAL-ABILITY OF FIRM: EMPIRICAL EVIDENCE FROM MALAYSIA

Rosita Chong, Raihana Firdaus Seah Abdullah and Alex Anderson

Global Journal of Business Research, 2009, vol. 3, issue 1, 133-145

Abstract: Malaysia like many other Asian countries was affected by the 1997 Financial Crisis. During this Financial Crisis, many companies succumbed. Pomerleano (1998) found that leverage of the companies if unchecked can be detrimental to the health of the company. He concluded that excess leverage at the micro level and also poor profitability resulted in the 1997 East Asian crisis. The aim of this study is to analyze the survival-ability of a sample of Malaysian public listed companies (PLCs) by analyzing the impact of financing decision of the sample firms. Both financing and operating leverage, along with the performance of the companies is evaluated. This study adopts a non-parametric approach to measure the company’s survival-ability in terms of their financing decision for their production process. In order to achieve this main objective, the study attempts (i) to identify, using Data Envelopment Analysis (DEA), the survivors among the PLCs based on their financing decisions and (ii) to analyze the effects of leverage on the survival of the PLCs. This article contributes to current literature in two areas, namely; the evaluation of the survival-ability of the PLCs via their financing decisions. Secondly, the use of financial and operating liability leverage in evaluating survival-ability of the companies.

JEL-codes: D92 G32 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (1)

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