SHS Web Conf.
Volume 36, 2017The 2016 4th International Conference on Governance and Accountability (2016 ICGA)
|Number of page(s)||9|
|Published online||24 July 2017|
Capital Structure Influence on Construction Firm Performance
1 Center for Diploma Programme, Multimedia University
2 Malaysia, Faculty of Accountancy, Universiti Teknologi MARA, Melaka
3 Accounting Research Institute, Universiti Teknologi MARA, Malaysia
* Corresponding author’s email: firstname.lastname@example.org
The interconnectedness between capital structure and firm performance is a topic of high interest among scholars and management alike. The scholars tend to unveil the why segment of the relationship, while the management looks into the how side to promote capital structure policy which can optimise the firm performance. While many studies have looked into this relationship across multiple industries and spanning across decades of data, the current study trains its lens on Malaysian public listed company companies which operate in the construction sector, and with data window between 2010 to 2014. This specific sector was chosen for their high gearing which renders firms to relatively high insolvency exposure emanating from interest rate fluctuations. The five-year timeframe was selected to isolate potential data contaminations streaming from global financial crisis which winds down in 2009. Financial data of the company were extracted from Bloomberg Terminal based on a pre-prepared list of Bloomberg tickers. A total of 225 observations were recorded in this study. Using Tobins Q as a proxy for firm performance, this study finds a mixed result where short term debts ratio indicates a significant negative effect, while long term debt ratio presents a non-significant influence. Explanations on this output are therefore discussed in this paper.
Key words: Capital structure / firm performance / panel data / debt ratio
© The Authors, published by EDP Sciences, 2017
This is an Open Access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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