The relationship between leverage factors and firm profitability - a study on 10 public listed firms in Malaysia/ Nur Atiqah Abdul Ghafar

• Main Author: Abdul Ghafar, Nur Atiqah
• Format: Thesis
• Language: English
• Published: 2017
• Subjects: Profits. Corporate profits; Financial leverage
• Online Access: https://ir.uitm.edu.my/id/eprint/57509/1/57509.pdf; https://ir.uitm.edu.my/id/eprint/57509/

The purpose of this is to investigate the relationship between leverage factors and firm profitability for selected public listed firms in Malaysia. 10 public listed firms from various industries were picked randomly from year 2012 to 2016. Selected proxies have been chosen to represent both dependent and independent variables. As for profitability the dependent variable, it used ROE (return on equity) as proxy. Besides, for leverage factors or the independent variables it used STD (short-term debt), LTD (long-term debt), TD (total debt) and DER (debt equity ratio). This research is carried out by using Balanced Panel Data method to capture heterogeneity across samples and due to the need to have bigger sample size. Besides, this study was using multiple regression analysis since there were many independent variables included such as STD, LTD, TD and DER. Assumption tests also included such as Descriptive Statistic, Regression Analysis, Correlation Analysis, Normality test (Jarque Bera), Multicollinearity, The White test and Breusch-Pagan-Godfrey test. There were positive relationships between all the variables except for STD where it has negative relationship. LTD (long- term debt) has positive significant relationship with ROE (return on equity). However, TD (total debt) and DER (debt equity ratio) were having positive insignificant relationship with ROE (return on equity). As for STD (short-term debt), it has negative insignificant relationship with ROE (return on equity). Besides, for the assumption tests, the error term not normally distributed, no multicollinearity problem exits, no serial correlation in error term and no heteroscadasticity (variance of observation is constant).