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Practices of capital structure decisions: Malaysia survey evidence

Mat Nor, Fauzias and Ibrahim, Khairunisah and Haron, Razali and Ibrahim , Izani and Alias, Mohd Adnan (2012) Practices of capital structure decisions: Malaysia survey evidence. International Review of Business Research Papers. ISSN 1837-5685 ( P), 1832-9543 (O) (In Press)

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Abstract

How firms make their corporate financing decisions has been one of the most extensively researched areas in corporate finance. Yet there is little consensus on how firms choose their capital structure. This study examines the capital structure practices of the Malaysian CFOs by employing a survey analysis on the non-financial listed firms in Malaysia, conducted from November 2010 to March 2011. 203 usable responses from the Malaysian CFOs were obtained, thus representing a response rate of 25%. This study is to analytically identify how the capital structure choices are influenced by those who make the decisions in practice. The survey result provides mixed support for the notion that firms does trade-off costs and benefits to derive an optimal debt ratio. From the financing hierarchy point of view, this study finds that Malaysian managers regard the use of internal funds for financing projects as the most important source of financing. This study enriches the literature by discovering the extent to which the capital structure theories are able to explain the corporate financing behavior and practices of Malaysian managers.

Item Type: Article (Journal)
Additional Information: 3565/10192 (International Review of Business Research Papers,Forthcoming January 2012)
Uncontrolled Keywords: Capital Structure Practices, Survey, Malaysia
Subjects: H Social Sciences > HG Finance > HG4001 Financial management. Business finance. Corporation finance.
Kulliyyahs/Centres/Divisions/Institutes: Kulliyyah of Economics and Management Sciences > Department of Business Administration
Depositing User: Asst. Prof. Dr. Khairunisah Ibrahim
Date Deposited: 14 Dec 2011 11:16
Last Modified: 14 Dec 2011 11:16
URI: http://irep.iium.edu.my/id/eprint/10192

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