header

Capital Structure Determinants Across Sectors: Comparison of Observed Evidences from the Use of Time Series and Panel Data Estimators

21 Pages Posted: 29 Oct 2022 Publication Status: Published

See all articles by Raja Rehan

Raja Rehan

University of Kuala Lumpur

Abdul Razak Abdul Hadi

University of Kuala Lumpur

Hafezali Iqbal Hussain

Taylor's University - Taylor’s Business School

Qazi Muhammad Adnan Hye

​Mohammad Ali Jinnah University

Abstract

This comparative study is an attempt to explore the determinants of capital structure for Malaysian firms listed at various sectors level. Within the framework of traditional and moderate dynamic capital structure theories, the key determinants such as fixed assets, current assets, return on equity, size, earning per share and total assets are tested in relation to debt equity ratio. The large-scale study entails data collected from a total of 551 listed firms of Bursa Malaysia main market over the 12-year period of 2005-2016. Notably, this study combines Time Series econometrics with Panel Data analysis to enhance the methodological robustness. Moreover, comparative analysis approach is accepted to recognize the most persistent capital structure determinants. In the first place, the Multiple Regression analysis (MRA) is selected as a base line estimation method. Subsequently, the Auto Regression Distributed Lag model (ARDL), the Panel Data Static models and Dynamic model via the Generalized Method of Moments (GMM) are employed to identify the capital structure determinants for the firms listed at Bursa Malaysia. The outcomes are surprising and indicate that the entire market is primarily controlled by the studied determinant total assets, which is significant in both construction and property sectors across MRA, ARDL and GMM analysis. Technically, the significant role of tangibility and the existence of speed of adjustment across sectors imply that the Dynamic Capital Structure is the prominent amongst all, followed by the Dynamic Trade-off theory.

Keywords: Capital Structure Theories, Time Series econometrics, Panel data analysis, Multiple Regression, ARDL, GMM

Suggested Citation

Rehan, Raja and Abdul Hadi, Abdul Razak and Hussain, Hafezali Iqbal and Hye, Qazi Muhammad Adnan, Capital Structure Determinants Across Sectors: Comparison of Observed Evidences from the Use of Time Series and Panel Data Estimators (October 29, 2022). Available at SSRN: https://ssrn.com/abstract=4261704 or http://dx.doi.org/10.2139/ssrn.4261704

Raja Rehan (Contact Author)

University of Kuala Lumpur ( email )

Abdul Razak Abdul Hadi

University of Kuala Lumpur ( email )

1016, Jalan Sultan Ismail
Kuala Lumpur, 50250
Malaysia

Hafezali Iqbal Hussain

Taylor's University - Taylor’s Business School ( email )

Qazi Muhammad Adnan Hye

​Mohammad Ali Jinnah University ( email )

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
68
Abstract Views
476
PlumX Metrics