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Revisiting capital structure theory : a test of pecking order and static order trade-of model from Malaysian capital market

journal contribution
posted on 2009-08-01, 00:00 authored by Huson Ali Ahmed, N Hisham
This study revisits the capital structure theory and test Pecking Order Hypothesis (POH) and Static Order Trade-off theory (STOT) using Malaysian Listed firms over a period from 1999 to 2002. The evidence from pecking order model suggests that the internal fund deficiency is the most important determinant that possibly explains the issuance of new debt in Malaysian capital market despite the lower predicting power.  While static trade off-model is not fit to explain the issuance of new debt issue in Malaysian capital market. This is an interesting findings that confirm the fact that Malaysian firms do not too much care about tax-shield benefit derive from employ both debt and non-debt tax-shield. The finn's size, which is used to neutralize the size effect, appears to provide some explanation for the variation in its capital structure policy choice; however asset structure and growth no evidence of static-order-trade-off is observed in Malaysian capital market.

History

Journal

International research journal of finance and economics

Volume

30

Pagination

58 - 65

Publisher

European Journals

Location

[London, England]

ISSN

1450-2887

Language

eng

Publication classification

C1 Refereed article in a scholarly journal

Copyright notice

2009, EuroJournals Publishing

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