Drivers of leverage in Malaysia’s blue chip firm: the case of manufacturing sector / Arina Raihan Azlan

This aim of this study is to explore the drivers of leverage in Malaysian Blue Chip manufacturing firms and to investigate whether these drivers are supporting Pecking Order theory (POT) or Trade-off theory (TOT). Generally, POT suggest that there is no optim...

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Main Author:	Azlan, Arina Raihan
Format:	Student Project
Language:	English
Published:	Faculty of Business Management 2017
Subjects:	Financial leverage
Online Access:	http://ir.uitm.edu.my/id/eprint/23630/ http://ir.uitm.edu.my/id/eprint/23630/1/PPb_ARINA%20RAIHAN%20AZLAN%20J%20BM%2017_5.pdf

id	uitm-23630
recordtype	eprints
spelling	uitm-236302019-04-07T07:43:14Z http://ir.uitm.edu.my/id/eprint/23630/ Drivers of leverage in Malaysia’s blue chip firm: the case of manufacturing sector / Arina Raihan Azlan Azlan, Arina Raihan Financial leverage This aim of this study is to explore the drivers of leverage in Malaysian Blue Chip manufacturing firms and to investigate whether these drivers are supporting Pecking Order theory (POT) or Trade-off theory (TOT). Generally, POT suggest that there is no optimal capital structure as firms prefer to use internal funds as first choice, followed by debt and equity as a last resort to finance their business. TOT, on the other hand, suggest optimal capital structure can achieve by setting off the benefits of debt with cost. The investigation is performed using panel data procedures for a sample of 32 firms listed in Bursa Malaysia during 2010 until 2015. Variable used in this study is debt to equity ratior known as leverageas dependent variable, whereas asset tangibility, market to book value, degree of operating leverage, return on invested capital proxy for profitability, firm size and non-debt tax shield as independent variable. The variables areregressed with panel least square and tested with fixed effect (cross section).The results suggest that profitability and non-debt tax shield has a negative significant to debt to equity ratio. Market-to-book value, degree of operating leverage, and firmsize appear to have a positive significant to debt to equityratio. However, asset tangibility is negative related but does not appear significant to the leverage. It appeared that asset tangibility, profitability, market to book value and non-debt tax shield is consistent with Pecking order theory, while firm size and degree of operating leverage areaccording to trade-off theory. Faculty of Business Management 2017 Student Project NonPeerReviewed text en http://ir.uitm.edu.my/id/eprint/23630/1/PPb_ARINA%20RAIHAN%20AZLAN%20J%20BM%2017_5.pdf Azlan, Arina Raihan (2017) Drivers of leverage in Malaysia’s blue chip firm: the case of manufacturing sector / Arina Raihan Azlan. [Student Project] (Submitted)
repository_type	Digital Repository
institution_category	Local University
institution	Universiti Teknologi MARA
building	UiTM Institutional Repository
collection	Online Access
language	English
topic	Financial leverage
spellingShingle	Financial leverage Azlan, Arina Raihan Drivers of leverage in Malaysia’s blue chip firm: the case of manufacturing sector / Arina Raihan Azlan
description	This aim of this study is to explore the drivers of leverage in Malaysian Blue Chip manufacturing firms and to investigate whether these drivers are supporting Pecking Order theory (POT) or Trade-off theory (TOT). Generally, POT suggest that there is no optimal capital structure as firms prefer to use internal funds as first choice, followed by debt and equity as a last resort to finance their business. TOT, on the other hand, suggest optimal capital structure can achieve by setting off the benefits of debt with cost. The investigation is performed using panel data procedures for a sample of 32 firms listed in Bursa Malaysia during 2010 until 2015. Variable used in this study is debt to equity ratior known as leverageas dependent variable, whereas asset tangibility, market to book value, degree of operating leverage, return on invested capital proxy for profitability, firm size and non-debt tax shield as independent variable. The variables areregressed with panel least square and tested with fixed effect (cross section).The results suggest that profitability and non-debt tax shield has a negative significant to debt to equity ratio. Market-to-book value, degree of operating leverage, and firmsize appear to have a positive significant to debt to equityratio. However, asset tangibility is negative related but does not appear significant to the leverage. It appeared that asset tangibility, profitability, market to book value and non-debt tax shield is consistent with Pecking order theory, while firm size and degree of operating leverage areaccording to trade-off theory.
format	Student Project
author	Azlan, Arina Raihan
author_facet	Azlan, Arina Raihan
author_sort	Azlan, Arina Raihan
title	Drivers of leverage in Malaysia’s blue chip firm: the case of manufacturing sector / Arina Raihan Azlan
title_short	Drivers of leverage in Malaysia’s blue chip firm: the case of manufacturing sector / Arina Raihan Azlan
title_full	Drivers of leverage in Malaysia’s blue chip firm: the case of manufacturing sector / Arina Raihan Azlan
title_fullStr	Drivers of leverage in Malaysia’s blue chip firm: the case of manufacturing sector / Arina Raihan Azlan
title_full_unstemmed	Drivers of leverage in Malaysia’s blue chip firm: the case of manufacturing sector / Arina Raihan Azlan
title_sort	drivers of leverage in malaysia’s blue chip firm: the case of manufacturing sector / arina raihan azlan
publisher	Faculty of Business Management
publishDate	2017
url	http://ir.uitm.edu.my/id/eprint/23630/ http://ir.uitm.edu.my/id/eprint/23630/1/PPb_ARINA%20RAIHAN%20AZLAN%20J%20BM%2017_5.pdf
first_indexed	2023-09-18T23:11:04Z
last_indexed	2023-09-18T23:11:04Z
_version_	1777418806081093632

Drivers of leverage in Malaysia’s blue chip firm: the case of manufacturing sector / Arina Raihan Azlan

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