[PDF][PDF] Capital structure speed of adjustment and Shari'ah compliance: empirical evidence from Malaysia
Journal of Engineering and Applied Sciences, 2017•researchgate.net
Our paper empirically tests the speed of adjustment of a sample of Malaysian firms. We find
that Shari'ah compliance influences the speed of adjustment implying that cost of capital for
Shari'ah compliant firms differ from non-compliant firms. Our tests further show that Shari'ah
compliant companies whose leverage leves are above target tend to adjust more rapidly to
target levels than non-compliant firms. The evidence provides an opposite conclusion on
firms below target levels. The findings provide a notion of debt versus equity choice for …
that Shari'ah compliance influences the speed of adjustment implying that cost of capital for
Shari'ah compliant firms differ from non-compliant firms. Our tests further show that Shari'ah
compliant companies whose leverage leves are above target tend to adjust more rapidly to
target levels than non-compliant firms. The evidence provides an opposite conclusion on
firms below target levels. The findings provide a notion of debt versus equity choice for …
Abstract
Our paper empirically tests the speed of adjustment of a sample of Malaysian firms. We find that Shari’ah compliance influences the speed of adjustment implying that cost of capital for Shari’ah compliant firms differ from non-compliant firms. Our tests further show that Shari’ah compliant companies whose leverage leves are above target tend to adjust more rapidly to target levels than non-compliant firms. The evidence provides an opposite conclusion on firms below target levels. The findings provide a notion of debt versus equity choice for Shari’ah compliant firms versus non-compliant firms indicating that preference is guided by implied cost of capital which differs based on the extent of current leverage levels.
researchgate.net
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