Debt and Financial Performance of REITs in Malaysia: A Moderating Effect of Financial Flexibility

Zainudin, Zalina; Ibrahim, Izani; Said, Rasidah Mohamad; Hussain, Hafezali Iqbal

doi:10.17576/pengurusan-2017-50-01

Cited by 12 publications

(12 citation statements)

References 52 publications

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“…Our findings are robust to White (1980) standard errors. Similar to the literature, we find the leverage (LEVit) coefficient to be positive suggesting that firms with higher levels of leverage tend to avoid short-term debt and thus providing support for the liquidity risk view of explaining debt maturity structure (Zainudin et al, 2017a). Barclay et al (2003) further argue that the positive coefficient can be interpreted as a mechanism to reduce the underinvestment problem.…”

Section: Resultssupporting

confidence: 84%

Debt Maturity and Shari'ah Compliance: Evidence from Malaysian Panel Data

Hussain¹,

Shamsudin²,

Salehuddin³

et al. 2018

ERSJ

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This paper investigates the effect of firm-specific characteristics on debt maturity in Malaysia. We examine the impact of Shari'ah compliance on debt maturity structure by grouping companies based on compliance status as governed by the Securities Commission of Malaysia over the sample period of 2007 to 2016. The results indicate that Shari'ah compliant firms tend to have longer debt maturity structure indicating that the nature of compliance determines the maturity structure of companies in Malaysia as managers of these firms tend to focus on mitigating liquidity risks potentially faced. In addition, Shari'ah compliant firms also tend to have lower bankruptcy costs. Contrary to their non-compliant counterparts, managers of Shari'ah compliant firms tend to change debt maturity structure as a signaling tool whilst opting for longer structures in periods of positive share price performance. We also find that Shar'iah compliance has no impact on firms' strategy of matching debt to asset maturity structure.

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Section: Resultssupporting

confidence: 84%

Debt Maturity and Shari'ah Compliance: Evidence from Malaysian Panel Data

Hussain¹,

Shamsudin²,

Salehuddin³

et al. 2018

ERSJ

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“…Looking into the empirical literature, we find that an overwhelming majority of managers' do have a target level for debt maturity structures when making security issue choices (Nor et al, 2011, Zainudin et al, 2017b. In addition, the literature further documents that firms that opt for shorter maturity structures would be more exposed to shocks at the macro level given that they would be forced to renegotiate debt terms more frequently (Jindrichovska, 2013;Custodio et al, 2013;Mallisa and Kusuma, 2017).…”

Section: Introductionmentioning

confidence: 93%

“…The literature provides several competing explanations of debt maturity structures ranging from the tax planning explanation (Lewis, 1990;Waluyo, 2018), a mechanism for reducing agency problems associated to moral hazards (Myers, 1977;Alias et al, 2017), an internal mechanism for singalling (Effendi and Disman, 2017;Slepov et al, 2017;Zainudin et al, 2017a) as well as a tool to manage firms' liquidity positions (Iqbal-Hussain et al, 2015;Arvanitis et al, 2017;.…”

Section: Introductionmentioning

confidence: 99%

The Impact of Sharia Compliance on the Adjustment to Target Debt Maturity of Malaysian Firms

Hussain¹,

Shamsudin²,

Anwar³

et al. 2018

ERSJ

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This paper investigates the speed of adjustment to target debt maturity for a sample of Malaysian firms based on the sample period of 2007 to 2016. We examine the impact of Sharia compliance on the speed of adjustment to target debt maturity structure by grouping companies based on nature of compliance to Sharia requirements which is categorised by the Securities Commission of Malaysia. In line with our expectations, the analysis shows that firms classified as Sharia compliant tend to adjust at more rapid rates to target debt maturity when below target levels suggesting that compliant firms are able to issue long-term debt at cheaper levels relative to noncompliant counterparts. In addition, the reverse is observed when evaluating firms above target levels where non-compliant firms adjust at more rapid rates. Our findings indicate that compliant firms are able to raise long-term debt at cheaper rates relative to non-compliant firms given the captive market situation observed in the Islamic capital markets in Malaysia. This does however indicate the potential for higher agency costs as well as greater levels of information asymmetry for compliant firms relative to noncompliant firms given that non-compliant firms are more willing to reduce maturity structures to reach target levels when above target levels.

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“…The development of modern capital structure theory has resulted in new capital structure theories including Trade Off Theory and Pecking Order Theory (Zainudin et al, 2017). The tradeoff theory is built on the assumption that tax shield interest and financial distress costs.…”

Section: Literature Reviewmentioning

confidence: 99%

Firm Size as Moderator to Capital Structure-Its Determinants Relations

Sari

Sulastri

2019

J. Fin. Bank. Review

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Objective – Capital structure policy is a strategic decision related to the selection of funding sources. The best mixed of capital structure will produce a low cost of capital, which in turn can maximize the value of the company. This study aims to determine the effect of company size as a moderator on the relationship of capital structure and its determinant factors on manufacturing companies in Indonesia and Malaysia. Methodology – Data were collected from 40 manufacturing companies listed on the Indonesia Stock Exchange and 130 manufacturing companies listed on the Bursa Malaysia during 2008-2017. This study will analyze the determinants of capital structure consisting of liquidity, profitability, tangibility and efficiency as well as company size as a moderating variable. The research method uses panel data regression. Findings – The company size provides a moderating effect on the relationship between capital structure with liquidity, profitability, tangibility and efficiency, and this moderation effect is strengthened in large companies in Indonesia. Instead, this moderation effect is weakening for large companies in Malaysia Novelty – Research shows that the "modified pecking order" model is better able to explain the capital structure, policies of manufacturing companies in Indonesia and Malaysia compared to the traditional pecking order and trade off theory models. Type of Paper: Empirical Keywords: Capital Structure; Pecking Order Theory; Trade Off Theory; Manufacturing Company; Moderating Effect. Reference to this paper should be made as follows: Sari, M; Netti, S.N; Sulastri, S. 2019. Firm Size as Moderator to Capital Structure-Its Determinants Relations, J. Fin. Bank. Review 4 (3): 108–115 https://doi.org/10.35609/jfbr.2019.4.3(4) JEL Classification: G23, G30, G32.

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Debt and Financial Performance of REITs in Malaysia: A Moderating Effect of Financial Flexibility

Cited by 12 publications

References 52 publications

Debt Maturity and Shari'ah Compliance: Evidence from Malaysian Panel Data

Debt Maturity and Shari'ah Compliance: Evidence from Malaysian Panel Data

The Impact of Sharia Compliance on the Adjustment to Target Debt Maturity of Malaysian Firms

Firm Size as Moderator to Capital Structure-Its Determinants Relations

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