Does corporate diversification induce financing choice?
This paper sets out to examine the effect of business diversification strategy on capital structure in Malaysia. The study segregates the firms into related and unrelated firms based on segmentation of Standard Industry Classification Code. It involes 76 public listed firms in Bursa Malaysia from...
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| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
| Published: |
2017
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| Subjects: | |
| Online Access: | http://eprints.unisza.edu.my/5665/1/FH02-FESP-18-12484.pdf http://eprints.unisza.edu.my/5665/ |
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| Summary: | This paper sets out to examine the effect of business diversification strategy on capital structure in Malaysia. The
study segregates the firms into related and unrelated firms based on segmentation of Standard Industry
Classification Code. It involes 76 public listed firms in Bursa Malaysia from 1994 to 2012. This research uses
static panel data to determine the credible association between diversification strategy and choice of financing.
The authors find that period fixed effect with seemingly unrelated regression produce better results to explain the
relationship between independent and dependent variables. The results demonstrate that there is insignificant
relationship between diversification strategy and capital structure. Robustness check on pre and post crisis data
generate similar output. The potential contribution of this work lies in offering empirical evidence to test the
previous held assumption that there is a significant relationship between corporate expansion and financing
decision done by firms. Future research should explore the possibility by using international firms to investigate
the association between those variables. |
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