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Investigating firm and country specifics in pursuing optimality. Shariah compliant securities in Malaysia

Haron, Razali (2013) Investigating firm and country specifics in pursuing optimality. Shariah compliant securities in Malaysia. In: MFA Conference : Financial Challenges and Economic Growth. The Way Forward, 2-4 June 2013, Kuala Lumpur.

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Islamic Capital Market (ICM) in Malaysia has expanded at an average rate of 13.6% per annum over the ten year period between 2000 and 2010. The size of Malaysia’s ICM is expected to expand at the average rate of 10.6% per annum to reach RM 2.9 trillion by 2020. In line with its future expansion, Shariah compliant securities are and will continue to be one of the important elements in ICM. Motivated by this fact, this study intends to explore the dynamic aspect of capital structure among Shariah compliant firms. The study finds that there exists optimal capital structure for Shariah compliant firms in Malaysia with both firm specifics and country specific factors playing important roles. Found to be under-adjust these firms readjust in a rapid speed of adjustment. Such rapid adjustment towards optimal leverage suggests the existence of dynamic trade-off theory. By employing a robust econometric model (GMM), this study contributes to the literature by examining the corporate financing behaviour of Shariah compliant firms in Malaysia ICM.

Item Type: Conference or Workshop Item (Full Paper)
Additional Information: 4581/31320
Uncontrolled Keywords: Dynamic capital structure, Shariah compliant securities, Partial Adjustment Model, Generalized Method of Moments, Malaysia
Subjects: H Social Sciences > HG Finance > HG4001 Financial management. Business finance. Corporation finance.
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button): Kulliyyah of Economics and Management Sciences > Department of Finance
Depositing User: Dr. Razali Haron
Date Deposited: 06 Sep 2013 17:31
Last Modified: 14 Sep 2013 19:29
URI: http://irep.iium.edu.my/id/eprint/31320

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