The impact of different firm sizes on capital structure determinants among listed consumer product firms in Malaysia

Abstract

This research is conducted to determine the impact of different firm sizes on the relationship between capital structure determinants and leverage among listed consumer product firms in Malaysia from year 2006 to 2015. All data was taken from annual report of the companies by using DataStream. In 2015, 130 firms were listed in Bursa Malaysia under the consumer product sector. However, only 108 firms were observed as several firms had insufficient data. This study uses the dependent variable of debt ratios i.e. short-term debt, long-term debt and total debt. The independent variables used are firm size, profitability, tangibility, liquidity, growth, non-tax debt shield and business risk. Those results were obtained by applying Pooled OLS and Fixed Effect Analysis. The main finding of this study is that different firm sizes will affect the relationship between capital structure determinants and leverage. The Fixed Effect analysis revealed that all determinants were significant across all types firm sizes. Furthermore, non-tax debt shield had the largest impact to all types of leverage across different firm sizes.