Capital Structure and Political Patronage: The Case of Malaysia

18 Pages Posted: 26 Jun 2007

See all articles by Donald R. Fraser

Donald R. Fraser

Texas A&M University - Department of Finance

Hao Zhang

University of Macau - Faculty of Business Administration

Chek Derashid

Tunku Puteri Intan Safinaz School of Accountancy (TISSA)

Abstract

This paper extends prior work on the links between political patronage and capital structure in developing economies. Three proxies of political patronage are developed and applied to a group of Malaysian firms over a 10-year period. We find a positive and significant link between leverage and each of the three measures of political patronage. We also find evidence of an indirect link between political patronage and capital structure through firm size and profitability.

Keywords: Capital structure, Political patronage, Malaysia

JEL Classification: M49

Suggested Citation

Fraser, Donald R. and Zhang, Hao and Derashid, Chek, Capital Structure and Political Patronage: The Case of Malaysia. Journal of Banking and Finance, 2005, Available at SSRN: https://ssrn.com/abstract=785911

Donald R. Fraser (Contact Author)

Texas A&M University - Department of Finance ( email )

430 Wehner
College Station, TX 77843-4218
United States
979-845- 2020 (Phone)

Hao Zhang

University of Macau - Faculty of Business Administration ( email )

Macau

Chek Derashid

Tunku Puteri Intan Safinaz School of Accountancy (TISSA) ( email )

University Utara Malaysia
Sintok, Kedah Darul Aman 06010
Malaysia
+6049287600 (Phone)
+6049287611 (Fax)

HOME PAGE: http://www.fpk.uum.edu.my/chek

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