Does Malaysian firms's corporate capital structure change have an impact on its corporate performance?

Teoh, Ker Li (2012) Does Malaysian firms's corporate capital structure change have an impact on its corporate performance? [Final Year Project Report] (Unpublished)

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Abstract

This study aims to examine the relationship that exists to be varying year by year between the corporate financial structure in debt and equity ratio change pattern of movement that affects the performance of the selected 505 public listed firms in Malaysia from year 2005 to 2010 and determines its consistency in related to either static trade-off theory or pecking order theory. It is tested in overall and also different economic period mainly the crisis period by using change of total debt, long term-debt, short-term debt and total equity as the proxy corporate financial structure. Whereas for the measurement of corporate performance will be using Market to Book Value, Net Profit Margin and Return on Equity. Results show that only change in total equity had a consistent positive significant relationship with the change of all corporate performance indicators, whereas a mix relationship was found between all kinds of change in debts with the change of all corporate performance indicators. In overall, majority of the relationships between changes in corporate financial structure with change of corporate performance was found consistent with the Static Trade-off Theory.

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