Date of Award

1-1-2001

Thesis Type

Masters

Document Type

Thesis

Divisions

Faculty of Business and Economics

Department

-

Institution

Universiti Malaya

Abstract

This study has three main objectives. Firsttly, It examines how the capital structure or public listed companies in Malaysia differ accross time and industry. The companies are grouped acccording to KLSE's classification of companies. Secondly, the study looks into whether the financing of fixed assets is matched by long-term debt or covered by long-term capital. Thirrdly, it examines lhe effect of leverage on the performance of public listed companies in Mataysia over the past 10 years. The study uses the total debt to total asset ratio ta measure leverage. Financing patterns of companies are examined by using the total capitalization, long-term debt to total debt, long-term debt to fixed asset as well as long-term debt and equity to fixed asset ratios. Economic value added per capital (EVA/capital) return on assets (ROA), retum on equity (ROE), net tangible assets per share (NTA/share) Altman's Z-scores and market-to-book ratios ,are used to measure company performances. The data are statistically tested by using the One-way ANOVA with F-ratio and Kruskal-Wallis test with H-statlstics. The One-Sample T-Test, is used to examine whether companies match long-term debts with their fixed assets or whether their long-term debt to fixed asset ratios are significantly different from the test value of 1. The study found that capital structure was significantly different across industry groups prier to 1998. Its findings on the stability of capital structure over time was mixed with some industry sectors showing significant differences aver time while the others did mot. The share of long­ term debt in total financing was different across industries but was generally not significantly different within the same sectors over lime. long-term deb, was found lo have increased over the period of study. The results on whether fixed assets were matched with long-term debt were not unanimous among the different sectors. However long-term debt and equity, which make up long-term capital, were found to adequately over the fixed assets or all the industry sectors studied. Lastly, the empirical findings of this study to the whole showed the using less debt was less risky and could produce better performances. However, if we look at the mean values of performance ratios used on 3 year-to-year basis. We cannot unanimously reject the null hypothesis that le mean ratios were not s1grnflcantl different across quartiles that group the sample companies according to their total debt to total asset ratios

Initial

snms

Additional Information

Dissertation (M.A) -- Faculty of Business and Economics, Universiti Malaya, 2001.

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