The Determinants of Capital Structure: Analysis of Real Estate Investment Trust (REITs) and Properties Companies Listed in Bursa Malaysia

• Main Author: Husnizam, Hosin
• Format: Dissertation
• Language: English; English
• Published: 2012
• Subjects: HG Finance
• Online Access: https://etd.uum.edu.my/3011/1/Husnizam_Hosin.pdf; https://etd.uum.edu.my/3011/3/Husnizam_Hosin.pdf; https://etd.uum.edu.my/3011/

Capital structure refers to the way a corporation finance its assets through some combination of equity, debt or hybrid securities. It is primarily comprises of long term debt, preferred stock and net worth. It also can be quantified by taking how much of each type of financing a company holds as a percentage of all its financing. Most of the companies raise funds by equity or debt. This study was set out to focus on the determinants of capital structure for the properties and real estate investment trust (REITs) companies that listed in the Bursa Malaysia. By using trade off and pecking order theories as theoretical background, 54 sample firms were analyzed. The data was collected for a 10 year time period (2001 – 2010). Leverage was used as dependent variable and six market variables were used as independent variable for the analysis; growth opportunities, profitability, size of the firm, tangibility, volatility and liquidity. Result of multiple linear regression found that, profitability, size of the firm, tangibility, volatility and liquidity were determinants of capital structure of Real Estate Investment Trust (REITs) in Malaysia. It appears that less profitable, larger, more tangible, less volatile and less liquid firms are more likely to have higher leverage level.