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Capital Structure of Government-Linked Companies in Malaysia

Author

Listed:
  • Irene Wei Kiong Ting

    (Department of Finance and Economics, Universiti Tenaga Nasional, 26700 Bandar Muadzam Shah, Pahang)

  • Hooi Hooi Lean

    () (Economics Program, School of Social Sciences, Universiti Sains Malaysia, 11800 Pulau Pinang)

Abstract

This study investigates the cross-sectional variation in leverage among publicly listed Government Linked Companies (GLCs) and non-GLCs (NGLCs) in Malaysia for the period from 1997 to 2008. The study uses balanced panel data with multivariate regression as the method of analysis. Results reveal that the GLCs are consistently more heavily leveraged than NGLCs. The findings indicate a significantly positive association between debt ratio (DR) and tangible assets but a negative relationship between DR and profitability for both GLCs and NGLCs. However, firm size is significantly negatively related to DR for GLCs and significantly positively related to DR for NGLCs. The study also finds that tangible assets and profitability have an inverse relationship with long-term debt. There is a significant negative association between asset structure, profitability and short-term debt. However, firm growth and cash flow have no influence on the determination of short-term and long-term debt.

Suggested Citation

  • Irene Wei Kiong Ting & Hooi Hooi Lean, 2011. "Capital Structure of Government-Linked Companies in Malaysia," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 7(2), pages 137-156.
  • Handle: RePEc:usm:journl:aamjaf00702_137-156
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    File URL: http://web.usm.my/journal/aamjaf/vol7-2-2011/7-2-6.pdf
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    Citations

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    Cited by:

    1. Irene Wei Kiong Ting & Hooi Hooi Lean & Qian Long Kweh & Noor Azlinna Azizan, 2016. "Managerial overconfidence, government intervention and corporate financing decision," International Journal of Managerial Finance, Emerald Group Publishing, vol. 12(1), pages 4-24, February.
    2. Abdalla Geth Abdussalam, 2017. "Exploring the Relationship between Working Capital Management, Profitability and Capital Structure," GATR Journals afr126, Global Academy of Training and Research (GATR) Enterprise.
    3. Hooi Hooi Lean & Irene W.K. Ting, 2016. "Will Penang Based Companies Perform Better than the Market?," Economics Bulletin, AccessEcon, vol. 36(1), pages 528-536.
    4. Siti Nur Aqilah Ab Wahab & Nur Ainna Ramli, 2014. "The Determinants of Capital Structure: An Empirical Investigation of Malaysian Listed Government Linked Companies," International Journal of Economics and Financial Issues, Econjournals, vol. 4(4), pages 930-945.

    More about this item

    Keywords

    capital structure; GLCs; NGLCs; Malaysia; debt ratios;

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