Internationalization and Capital Structure: Evidence from Malaysian Manufacturing Firms

Abstract

This paper attempts to examine the determinants of capital structure for internationalized manufacturing firms that are listed on Bursa Malaysia. Firm-related characteristic variables namely internationalization, firm size, profitability, company growth and tangibility over period 2007-2011 are tested their relationship with debt ratio of firms by using panel data Fixed Effects Model. The results showed that firm size and tangibility are significantly positively related with debt ratio while internationalization, profitability and company growth are significantly inversely related with debt ratio. The findings indicate that the static trade-off theory, pecking-order theory and agency theory are pertinent in Malaysia situation.

Factors that Affect the Debt Ratio of Internationalized Nonfinancial Firms

“…The results showed that firm size actually has a significant negative effect on the debt ratio. This is contrary to Albaity (2013) that said firms with larger size tend to use more debt and increase the firm's leverage. On the other hand, the results showed that large firm size could attract investors to invest the money as capital so that the use of debt for capital is reduced.…”

“…H1: Internationalization has a negative effect on the debt ratio. Albaity (2013) stated that the larger the firm size, the smaller the risk of bankruptcy of the company would be. Firms with larger size have a better ability to meet their obligations than firms with smaller size.…”

Kebijakan Hutang: Struktur Aset, Profitabilitas Dan Peluang Pertumbuhan

“…Perusahaan dengan profitabilitas tinggi akan cenderung untuk menahan labanya, sehingga saldo laba perusahaan semakin besar. Jika perusahaan membutuhkan dana untuk operasional maupun investasi, saldo laba akan digunakan sebagai sumber pendanaan sehingga tingkat hutang relatif rendah, bahkan hingga kemungkinan tidak menggunakan hutang (Albaity & Chuan 2013, Hoffmann et al 2014, Margaretha 2014. Oleh karena itu, tinggi rendahnya profitabilitas menentukan rendah tingginya hutang yang dimilikinya.…”

“…Hal tersebut dikarenakan aset tetap dapat digunakan sebagai jaminan ke kreditur dalam memberikan hutang kepada perusahaan (Chung 1993). Dengan demikian, perusahaan menganggap bahwa peluang dalam memperoleh hutang akan semakin besar jika aset yang dimiliki semakin banyak, serta asimetri informasi yang terjadi akan semakin kecil (Albaity & Chuan 2013, Srimindarti & Hardiningsih 2017.…”

“…Menurut pecking order theory, pendanaan internal lebih diutamakan oleh perusahaan. Perusahaan dengan tingkat profitabilitas yang tinggi memiliki tingkat hutang rendah, karena perusahaan mempunyai saldo laba yang mencukupi untuk membiayai operasionalnya (Albaity & Chuan, 2013;Hoffmann, Bertín, & Warleta, 2014;Margaretha, 2014). Sebaliknya, apabila profitabilitas rendah, perusahaan akan mempertimbangkan penggunaan hutang untuk membiayai operasionalnya (Myers, 1984).…”