Determinants of Capital Structure from Shariah-Compliant Firms in Travel, Leisure and Hospitality Sector in Malaysia

Abstract

Capital structure is essential to a firm as it influences both profit and risk to investors. A balanced capital structure reflects the overall health of the company. As a result, the goal of this research is to look into the capital structures of publicly listed Shariah-compliant firms in the travel, leisure, and hospitality sectors. This study examines 5 publicly listed Shariahcompliant companies in Malaysia throughout 2011 -2020, and the total number of observations utilized is 50. Independent variables such as tangible assets, debt-to-equity, and long-term debt are chosen to indicate capital structure. Profitability or performance is identified as the dependent variable of return on assets (ROA) and return on equity (ROE). The majority of the independent factors in Shariah firms showed a substantial association with the firm's success, according to the study's findings. Shariah businesses' asset tangible (TANG) and debt-to-equity (DTE) ratios have a positive connection with return on asset (ROA), but have an insignificant negative link with return on equity (ROE). Long-term debt (LTD), on the other hand, provided a negative insignificant return on asset (ROA) and a positive insignificant return on equity (ROE).