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The determinants of capital structure among SMEs in Malaysia

Mohamed Zabri, Shafie (2012) The determinants of capital structure among SMEs in Malaysia. In: International Conference of Technology Management, Business and Entrepreneurship 2012 (ICTMBE 2012), 18-19 December 2012, Renaissance Hotel, Melaka, Malaysia.


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At present there is limited number of studies into capital structure among small and medium sized enterprises (SMEs). Most theoretical and empirical studies of this topic are focused on large corporations. However, increasing importance of economic contributions of SMEs around the world, particularly in developing countries necessitates better understanding of capital structure decisions among SMEs. This research investigates the determinants of capital structure among SMEs in Malaysia, among SMEs within the list of Enterprise 50 award winners from 1998 to 2010. Electronic surveys were conducted with a response rate of 29.5%. Result shows that the average debt-to-equity ratio among these SMEs is 57 to 43. Factors determining firm's capital structure are investigated through selected firm's characteristic which focuses on the possible association between these characteristics with firm's capital structure. Overall, three out of seven selected firm's characteristics were found to have statistically significant relationship with firm's capital structure, and all these three variables were also found to have an ability in explaining variations in the firm's capital structure. Bivariate and multiple regression analysis revealed that non-debt tax shields, tangibility of assets and firm's level of liquidity to have a statistically significant relationship with (and an ability to explains) firm's capital structure. This research enhances the existing body of knowledge of financial practices of SMEs, particularly within the context Malaysian SMEs by providing the information on determinants of firm's capital structure.

Item Type: Conference or Workshop Item (Paper)
Uncontrolled Keywords: capital structure; SMEs; Malaysia
Subjects: H Social Sciences > HG Finance
Divisions: Faculty of Technology Management and Business > Department of Technology Management
Depositing User: Normajihan Abd. Rahman
Date Deposited: 20 Mar 2013 08:53
Last Modified: 21 Jan 2015 08:22
URI: http://eprints.uthm.edu.my/id/eprint/3442
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