Determinants of Capital Structure for Listed Construction Companies in Malaysia

Nurul Syuhada Baharuddin, Zaleha Khamis, Wan Mansor Wan Mahmood and Hussian Dollah

Journal of Applied Finance & Banking, 2011, vol. 1, issue 2, 6

Abstract: Some studies have determined the impact of financial factors on the failure of firms; such as bad financial management and lack of capital which are the main determinants of failure. The construction industry is generally also facing these problems to some extent. Where the Malaysian scene is concerned, the failure rate of construction companies is quite high. This study examines the debt and equity structure for the construction companies listed in the Bursa Malaysia market during a seven-year period from 2001 to 2007. This sample data derived from financial statements of 42 companies with a number of observations totalling 294. The dependent variable used is debt ratio and expressed by total debt divided by total assets while the independent variables are profitability, size, growth and assets tangibility. Using panel data method, the results show that the profitability of the construction companies is significant negatively relations to debt ratio while size, growth and assets tangibility are positively significant in relations to total debt. The results of the study suggest that construction companies depend heavily on debt financing compared to equity financing for expansion and growth. The findings also indicate that profit is reduced when the companies are using more debt.

Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.scienpress.com/Upload/JAFB%2fVol%201_2_6.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spt:apfiba:v:1:y:2011:i:2:f:1_2_6

Access Statistics for this article

More articles in Journal of Applied Finance & Banking from SCIENPRESS Ltd
Bibliographic data for series maintained by Eleftherios Spyromitros-Xioufis ().