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
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
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