IDEAS home Printed from https://ideas.repec.org/a/rnd/arimbr/v16y2024i1p76-93.html
   My bibliography  Save this article

Determinants of Capital Structure from Malaysian Shariah-Compliant Food and Beverages Firms

Author

Listed:
  • Norliza Che-Yahya
  • Nor Akila Mohd Kassim
  • Nur Afiqah M. Rasit
  • Nursyazwina Zainal Abidin
  • Erni Nazirah Shahrel
  • Norizzanie Wajihah Zulkefli
  • Nurliyana Zalani
  • Atirah Abd Latif
  • Siti Sarah Alyasa-Gan

Abstract

This paper addresses the dearth of empirical research on the capital structure of Shariah-compliant food and beverage (F&B) firms in Malaysia. Despite the industry's dynamic growth, specific financing needs, and adherence to Shariah principles, a comprehensive investigation into the determinants of their capital structure choices is lacking. By exploring factors such as profitability, tangibility, growth opportunities, liquidity, and firm size, this paper aims to provide valuable insights into the financial strategies of these specific entities and fill crucial knowledge gaps in empirical evidence. The study employs panel data, a combination of cross-sectional and time-series data, with a sample comprising 24 Shariah-compliant F&B firms listed on Bursa Malaysia, totalling 240 observations. Quantitative methods are applied using secondary data sourced from the Eikon database and financial statements in the annual reports of Bursa Malaysia-listed companies from 2013 to 2022. The findings reveal that profitability, tangibility, liquidity, and firm size significantly impact the capital structure choices of Shariah-compliant F&B firms, while growth opportunities emerge as an insignificant factor. These results support the application of the trade-off theory for profitability and the pecking order theory for tangibility, liquidity, and firm size, shedding light on the nuanced financial decision-making processes within this sector.

Suggested Citation

  • Norliza Che-Yahya & Nor Akila Mohd Kassim & Nur Afiqah M. Rasit & Nursyazwina Zainal Abidin & Erni Nazirah Shahrel & Norizzanie Wajihah Zulkefli & Nurliyana Zalani & Atirah Abd Latif & Siti Sarah Alya, 2024. "Determinants of Capital Structure from Malaysian Shariah-Compliant Food and Beverages Firms," Information Management and Business Review, AMH International, vol. 16(1), pages 76-93.
  • Handle: RePEc:rnd:arimbr:v:16:y:2024:i:1:p:76-93
    DOI: 10.22610/imbr.v16i1(I)S.3729
    as

    Download full text from publisher

    File URL: https://ojs.amhinternational.com/index.php/imbr/article/view/3729/2438
    Download Restriction: no

    File URL: https://ojs.amhinternational.com/index.php/imbr/article/view/3729
    Download Restriction: no

    File URL: https://libkey.io/10.22610/imbr.v16i1(I)S.3729?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Satish Kumar & Sisira Colombage & Purnima Rao, 2017. "Research on capital structure determinants: a review and future directions," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 13(2), pages 106-132, April.
    2. Ilya A. Strebulaev, 2007. "Do Tests of Capital Structure Theory Mean What They Say?," Journal of Finance, American Finance Association, vol. 62(4), pages 1747-1787, August.
    3. Czerwonka Leszek & Jaworski Jacek, 2022. "Capital structure and its determinants in companies originating from two opposite sides of the European Union: Poland and Portugal," Economics and Business Review, Sciendo, vol. 8(1), pages 24-49, April.
    4. Satish Kumar & Sisira Colombage & Purnima Rao, 2017. "Research on capital structure determinants: a review and future directions," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 13(2), pages 106-132, April.
    5. Laurence Booth & Varouj Aivazian & Asli Demirguc‐Kunt & Vojislav Maksimovic, 2001. "Capital Structures in Developing Countries," Journal of Finance, American Finance Association, vol. 56(1), pages 87-130, February.
    6. Bülent Köksal & Cüneyt Orman, 2015. "Determinants of capital structure: evidence from a major developing economy," Small Business Economics, Springer, vol. 44(2), pages 255-282, February.
    7. Mohammad M. Omran & John Pointon, 2009. "Capital structure and firm characteristics: an empirical analysis from Egypt," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 8(4), pages 454-474, October.
    8. Rajan, Raghuram G & Zingales, Luigi, 1995. "What Do We Know about Capital Structure? Some Evidence from International Data," Journal of Finance, American Finance Association, vol. 50(5), pages 1421-1460, December.
    9. Suhaila, Mat Kila & Wan Mahmood, Wan Mansor, 2008. "Capital Structure and Firm Characteristics: Some Evidence from Malaysian Companies," MPRA Paper 14616, University Library of Munich, Germany.
    10. repec:bla:jfinan:v:43:y:1988:i:1:p:1-19 is not listed on IDEAS
    11. Evrim Hilal Kahya & Hüseyin Yiğit Ersen & Cumhur Ekinci & Oktay Taş & Koray D. Simsek, 2020. "Determinants of capital structure for firms in an Islamic equity index: comparing developed and developing countries," Journal of Capital Markets Studies, Emerald Group Publishing Limited, vol. 4(2), pages 167-191, November.
    12. Wafaa M. Sbeti & Imad Moosa, 2012. "Firm-specific factors as determinants of capital structure in the absence of taxes," Applied Financial Economics, Taylor & Francis Journals, vol. 22(3), pages 209-213, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Enrico Santarelli & Hien Thu Tran, 2018. "The interaction of institutional quality and human capital in shaping the dynamics of capital structure in Vietnam," WIDER Working Paper Series wp-2018-66, World Institute for Development Economic Research (UNU-WIDER).
    2. İbrahim Yarba & Z. Nuray Güner, 2020. "Leverage dynamics: Do financial development and government leverage matter? Evidence from a major developing economy," Empirical Economics, Springer, vol. 59(5), pages 2473-2507, November.
    3. Enrico Santarelli & Hien Thu Tran, 2018. "The interaction of institutional quality and human capital in shaping the dynamics of capital structure in Vietnam," WIDER Working Paper Series 66, World Institute for Development Economic Research (UNU-WIDER).
    4. Shoaib Khan & Tahir Akhtar & Ameen Qasem, 2024. "Dynamics of capital structure determinants: empirical evidence from GCC countries," Future Business Journal, Springer, vol. 10(1), pages 1-18, December.
    5. Tekalign Negash Kebede, 2024. "Firm-specific and country-level determinants of commercial banks capital structures: evidence from Ethiopia," Journal of Innovation and Entrepreneurship, Springer, vol. 13(1), pages 1-25, December.
    6. Raja Zekri Ben Hamouda & Nessrine Hamzaoui & Faouzi Jilani, 2023. "Capital Structure Determinants: New Evidence from the MENA Region Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 13(1), pages 144-163, January.
    7. Ahmed Sakr & Amina Bedeir, 2019. "Firm Level Determinants of Capital Structure: Evidence From Egypt," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 10(1), pages 68-85, January.
    8. Furkan Baser & Soner Gokten & Guray Kucukkocaoglu & Hasan Ture, 2016. "Liquidity-Profitability Tradeoff Existence In Turkey: An Empirical Investigation Under Structural Equation Modeling," Copernican Journal of Finance & Accounting, Uniwersytet Mikolaja Kopernika, vol. 5(2), pages 27-44.
    9. Nigel Driffield & Sarmistha Pal, 2010. "Evolution of capital structure in east Asia—corporate inertia or endeavours?," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 173(1), pages 1-29, January.
    10. Fadoua Kouki, 2021. "The Impact of Market Timing on European Firms¡¯ Capital Structure: RLBOs vs. IPOs," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 12(2), pages 219-232, April.
    11. Karin Jõeveer, 2013. "What do we know about the capital structure of small firms?," Small Business Economics, Springer, vol. 41(2), pages 479-501, August.
    12. Zhaoxia Xu, 2007. "Do Firms Adjust Toward a Target Leverage Level?," Staff Working Papers 07-50, Bank of Canada.
    13. Demirci, Irem & Huang, Jennifer & Sialm, Clemens, 2019. "Government debt and corporate leverage: International evidence," Journal of Financial Economics, Elsevier, vol. 133(2), pages 337-356.
    14. Md. Faruk Hossain & Md. Ayub Ali, 2012. "Impact of Firm Specific Factors on Capital Structure Decision: An Empirical Study of Bangladeshi Companies," International Journal of Business Research and Management (IJBRM), Computer Science Journals (CSC Journals), vol. 3(4), pages 163-182, August.
    15. Demid Chernenko, 2019. "Capital structure and oligarch ownership," Economic Change and Restructuring, Springer, vol. 52(4), pages 383-411, November.
    16. Attiya Yasmin Javid & Qaisar Imad, 2012. "A Decomposition Analysis of Capital Structure: Evidence from Pakistan’s Manufacturing Sector," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 17(1), pages 1-31, Jan-June.
    17. Mai, Nhat Chi, 2012. "Market timing, taxes and capital structure: evidence from Vietnam," OSF Preprints t3mvs, Center for Open Science.
    18. Aleksandra Stoiljković & Slavica Tomić & Bojan Leković & Milenko Matić, 2022. "Determinants of Capital Structure: Empirical Evidence of Manufacturing Companies in the Republic of Serbia," Sustainability, MDPI, vol. 15(1), pages 1-19, December.
    19. Heider, Florian & Ljungqvist, Alexander, 2015. "As certain as debt and taxes: Estimating the tax sensitivity of leverage from state tax changes," Journal of Financial Economics, Elsevier, vol. 118(3), pages 684-712.
    20. Pires, Heloisa Márcia & Fernandes, Elton, 2012. "Malmquist financial efficiency analysis for airlines," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(5), pages 1049-1055.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rnd:arimbr:v:16:y:2024:i:1:p:76-93. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Muhammad Tayyab (email available below). General contact details of provider: https://ojs.amhinternational.com/index.php/imbr .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.