The relationship between government ownership, firm performances and leverage: An analysis from Malaysian listed firms

Abstract

The purpose of this paper is to examining the impact of government ownership on firm performance and leverage in Malaysia. In this paper, we examine governance mechanism and firm performance and leverage of 200 Malaysian firms over 5 year periods from 2005 - 2009. We use fixed effect panel regression model in predicting capital structure of Malaysian firms. We use two indicators as independent variables which are debt ratio and debt over equity ratios. This paper is to determine whether after controlling firm specific characteristics such as corporate governance, agency cost, growth, risk and profitability, government involvement will influence decision on debt policy of the firm. This study may enable the firms to make better decision on their external financing. The inverse association of leverage and profitability implies that the firms are able to get the required capital easily due to the higher level of profits. The existence of government support and backup also will ensure the level in the firms is at the controllable. Therefore, the findings will be able to add new knowledge to the corporate managers and policy makers especially on decision-making on capital structure.

Value Relevance of Government Ownership of Equity (Evidence from Russian Listed Companies)

“…We will connect to the stream of literature of purely market effects of governmental ownership, examining the latter as an independent variable in market valuation [Alfaraih, Alanezi, Almujamed, 2012;Razak, Saidi, Mahat, 2013] in the widely used valuation model by Ohlson (1995), which serves to measure certain value effects [Ohlson, 1995;Hassel, 2005;Loh et al, 2017]. We will also connect to literature on the concentration of ownership effect.…”