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Capital Structure Determinants of Bursa Malaysia PN17 Firms

In: Board Diversity and Corporate Governance

Author

Listed:
  • Izdihar Baharin

    (UOW Malaysia KDU Penang)

  • Ilham Sentosa

    (Kuala Lumpur Business School)

Abstract

The study on the determinants of capital structure had been done extensively both in Malaysia and globally. However, there seems to be a gap in this area of study for Malaysian financially distressed public firms. The intention of this study is to plug the gap, especially in the Malaysian capital market environment, both in terms of sample and data analysis. This study employed the PLS methodology, which is another gap in itself, as its main data analysis technique, using the WrapPLS software. The main issue of this chapter is to investigate whether there are indicators (determinants) for pre- and post-reorganization PN17 firms in Bursa Malaysia. A total of 49 sample firms were selected from a population of 155 firms across the period of five years for both the pre- and post-reorganization firms analysis in order to control for inconsistent behaviour among the firms. The study showed that there are reliable determinants to indicate companies are having financial distress up to two years before it happens and an indicator showing that the company had successfully reorganized its capital structure, one year after the financially distressed firms exit the PN17 status. In general, this study found that Bursa Malaysia PN17 firms support the behaviour of the static trade-off theory and the PN17 status is effective in achieving its objective.

Suggested Citation

  • Izdihar Baharin & Ilham Sentosa, 2024. "Capital Structure Determinants of Bursa Malaysia PN17 Firms," CSR, Sustainability, Ethics & Governance, in: Reem Khamis & Amina Buallay (ed.), Board Diversity and Corporate Governance, pages 433-444, Springer.
    • Handle: RePEc:spr:csrchp:978-3-031-53877-3_33
    DOI: 10.1007/978-3-031-53877-3_33
    as

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