The Impact of Financial Crisis on the Determinants of Capital Structure among Shariah Constructions Firms
The aim of this empirical study is to explore the factors that affect the capital structure of construction firms and to investigate whether the capital structure models derived from Western settings provide convincing explanations for capital structure decisions of the Malaysia firms. This study f...
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| Format: | Article |
| Language: | English |
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UiTM Press
2019-12-01
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| Series: | Journal of International Business, Economics and Entrepreneurship |
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| Online Access: | https://journal.uitm.edu.my/ojs/index.php/JIBE/article/view/1228 |
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| author | Mohamad Nizam Jaafar Amirul Afif Muhamat Norzitah Abdul Karim Sharifah Faigah Syed Alwi Noraini Peie |
| author_facet | Mohamad Nizam Jaafar Amirul Afif Muhamat Norzitah Abdul Karim Sharifah Faigah Syed Alwi Noraini Peie |
| author_sort | Mohamad Nizam Jaafar |
| collection | DOAJ |
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The aim of this empirical study is to explore the factors that affect the capital structure of construction firms and to investigate whether the capital structure models derived from Western settings provide convincing explanations for capital structure decisions of the Malaysia firms. This study focuses on Shariah compliant construction companies since this industry has been contributing significantly towards Malaysia economic growth. In addition, this study also includes the impact of financial crisis towards firms’ capital structure decision. Panel data from 11 Shariah compliant construction companies in Malaysia were analyzed for duration of 17 years (2001-2017). Different conditional theories of capital structure are reviewed i.e. trade‐off theory, pecking order theory, agency theory, and theory of free cash flow, in order to formulate testable propositions concerning the determinants of capital structure of the construction firms. The dependent variable that being used is debt ratio, while independent variables are firm size, profitability, tangible asset, growth opportunity, liquidity, and crisis respectively. Finding indicates that firm size, profitability and tangible asset are significant towards debt ratio. However, other variables including financial crisis did not have any significant impact on capital structure decision. The results of this study provide important implication to investors and manager of firms in making best decision on capital structure. This study also adds values to the existing knowledge regarding determinants of capital structure and financial crisis
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| format | Article |
| id | doaj-art-6e637bc82c8a4ea5b648b7b1a6b99e0d |
| institution | Kabale University |
| issn | 2550-1429 |
| language | English |
| publishDate | 2019-12-01 |
| publisher | UiTM Press |
| record_format | Article |
| series | Journal of International Business, Economics and Entrepreneurship |
| spelling | doaj-art-6e637bc82c8a4ea5b648b7b1a6b99e0d2024-11-22T07:20:24ZengUiTM PressJournal of International Business, Economics and Entrepreneurship2550-14292019-12-0142The Impact of Financial Crisis on the Determinants of Capital Structure among Shariah Constructions FirmsMohamad Nizam Jaafar0Amirul Afif Muhamat1Norzitah Abdul Karim2Sharifah Faigah Syed Alwi3Noraini Peie4Arshad Ayub Graduate Business School, Universiti Teknologi MARA, Shah Alam, MalaysiaFaculty of Business Management, Universiti Teknologi MARA, SelangorArshad Ayub Graduate Business School, Universiti Teknologi MARA, Shah Alam, MalaysiaArshad Ayub Graduate Business School, Universiti Teknologi MARA, Shah Alam, MalaysiaFaculty of Business Management, Universiti Teknologi MARA, Selangor The aim of this empirical study is to explore the factors that affect the capital structure of construction firms and to investigate whether the capital structure models derived from Western settings provide convincing explanations for capital structure decisions of the Malaysia firms. This study focuses on Shariah compliant construction companies since this industry has been contributing significantly towards Malaysia economic growth. In addition, this study also includes the impact of financial crisis towards firms’ capital structure decision. Panel data from 11 Shariah compliant construction companies in Malaysia were analyzed for duration of 17 years (2001-2017). Different conditional theories of capital structure are reviewed i.e. trade‐off theory, pecking order theory, agency theory, and theory of free cash flow, in order to formulate testable propositions concerning the determinants of capital structure of the construction firms. The dependent variable that being used is debt ratio, while independent variables are firm size, profitability, tangible asset, growth opportunity, liquidity, and crisis respectively. Finding indicates that firm size, profitability and tangible asset are significant towards debt ratio. However, other variables including financial crisis did not have any significant impact on capital structure decision. The results of this study provide important implication to investors and manager of firms in making best decision on capital structure. This study also adds values to the existing knowledge regarding determinants of capital structure and financial crisis https://journal.uitm.edu.my/ojs/index.php/JIBE/article/view/1228Construction firms, Financial crisis, Islamic capital market, Panel data Shariah |
| spellingShingle | Mohamad Nizam Jaafar Amirul Afif Muhamat Norzitah Abdul Karim Sharifah Faigah Syed Alwi Noraini Peie The Impact of Financial Crisis on the Determinants of Capital Structure among Shariah Constructions Firms Journal of International Business, Economics and Entrepreneurship Construction firms, Financial crisis, Islamic capital market, Panel data Shariah |
| title | The Impact of Financial Crisis on the Determinants of Capital Structure among Shariah Constructions Firms |
| title_full | The Impact of Financial Crisis on the Determinants of Capital Structure among Shariah Constructions Firms |
| title_fullStr | The Impact of Financial Crisis on the Determinants of Capital Structure among Shariah Constructions Firms |
| title_full_unstemmed | The Impact of Financial Crisis on the Determinants of Capital Structure among Shariah Constructions Firms |
| title_short | The Impact of Financial Crisis on the Determinants of Capital Structure among Shariah Constructions Firms |
| title_sort | impact of financial crisis on the determinants of capital structure among shariah constructions firms |
| topic | Construction firms, Financial crisis, Islamic capital market, Panel data Shariah |
| url | https://journal.uitm.edu.my/ojs/index.php/JIBE/article/view/1228 |
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