The Determinant of Capital Structure of Malaysian Firms: Test of Pecking Order and Trade-off Theories under Different Corporate Ownership Identities
Journal Title: IOSR Journal of Economics and Finance (IOSR-JEF) - Year 2018, Vol 9, Issue 4
Abstract
This paper develops a corporate ownership identity-based to investigate the financial decision of Malaysian firms. Specifically, this study investigates whether the financial strategy of family, managerialowned, foreign, and government firms tend to adopt the assumptions of the trade-off or pecking order theories. Panel data analysis is conducted on a sample of 407 firms for the period of 2012 to 2015. In general, the results provide evidence for both theories. The trade-off theory seems to be more obvious in firms dominated by family and managers. On the other hand,pecking order theory is more pronounced in government and foreign firms. The current paper argues that the information asymmetry is lower in managerial-owned and family firms compared to government and foreign firms because of their direct engagement in the management. In addition, the higher information asymmetry in government and foreign firms slows the speed of adjustment to the target capital structure.
Authors and Affiliations
MousaSharafAdinHezam Saleh, HanitaKadir Shahar, Yusnidah Ibrahim
Keywords
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- EP ID EP414887
- DOI 10.9790/5933-0904026170.
- Views 445
- Downloads 0
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