The Determinants of Capital Structure for Malaysian Food Producing Companies

Abstract

The aim of the research is to investigate profitability, size, growth opportunity, asset tangibility and liquidity which are firm specific factors determine the capital structure of Malaysia’s listed companies in food producer sector. The research done on 45 companies listed under food producer sector at Bursa Malaysia which covered the period of 2003-2012, total observations of 450 firmsyears. The dependent variable is total debt ratio and independent variables are profitability, size, growth opportunity, asset tangibility and liquidity. The research employed Pearson correlation coefficient and multiple linear regressions and the findings shows profitability, size and liquidity are negatively significant related to total debt ratio. Tangibility is founds positively related to total debt ratio and growth opportunity is found positively insignificant with total debt ratio. Key Terms: Debt level, Gearing, profitability, size, growth opportunity, asset tangibility liquidity, food producer sector