THE RELATIONSHIP BETWEEN MALAYSIAN PUBLIC-LISTED FIRMS’ CORPORATE GOVERNANCE AND THEIR CAPITAL STRUCTURE

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Abstract

The purpose of this paper is to investigate the relationship between corporate governance practices and capital structure of public-listed companies in Malaysia. Using the annual reports of 273 Malaysian public-listed firms on the Bursa Malaysia between 2008 and 2012, hierarchical multiple regression analysis was conducted. Corporate governance was measured by variables including board size, CEO duality, ownership structure, and board meeting. Capital structure was measured through four variables: debt-to-equity ratio, long-term debts, short-term debts, and debt ratio. The findings indicated that corporate governance practices have a positive influence on the debt-equity ratio, long-term debt, short-term debt and a debt ratio of capital structure. However, corporate governance practices’ influence on the debt ratio is found statistically insignificant. The findings also indicate that firm size moderates the relationship between corporate governance variables and capital structure. Empirically, these findings are useful for measuring and understanding financing decisions taken by the Malaysian public listed firms. It also offers insights to policymakers interested in enhancing the role of corporate governance in formulating management strategies.

Keywords: Corporate Governance, Firm Size, Capital Structure, Moderating, Malaysian Public-Listed Companies

JEL Classification: M41

Received: 31.03.2019

Accepted: 22.05.2019

Published online: 23.05.2019

How to cite this paper: Abdlazez, F. A., Lasyoud, A. A., & Boshanna, A. (2019). The relationship between Malaysian public-listed firms’ corporate governance and their capital structure. Corporate Ownership & Control, 16(3), 98-112. https://doi.org/10.22495/cocv16i3art9