The relationship between financial leverage and the value of a firm for industrial companies listed on the KLSE mainboard / Ahmad Mizani Ab Rahman
The theory of capital structure and its impact on the value of a firm is perhaps one of the most influential yet controversial, in finance. Since its introduction in 1958 by Modiglianni and Miller, which assumed that in a perfect capital market, capital structure decisions are irrelevant to the valu...
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| Format: | Student Project |
| Language: | English |
| Published: |
2000
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| Online Access: | http://ir.uitm.edu.my/id/eprint/45505/1/45505.pdf http://ir.uitm.edu.my/id/eprint/45505/ |
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| Summary: | The theory of capital structure and its impact on the value of a firm is perhaps one of the most influential yet controversial, in finance. Since its introduction in 1958 by Modiglianni and Miller, which assumed that in a perfect capital market, capital structure decisions are irrelevant to the value of firm, there had been various pros and cons views put forward by other researcher, especially in the practical use of the theory.
The purpose of this study is to see whether there is a relationship between financial leverage and the value of a firm of Industrial companies of the Kuala Lumpur Stock Exchange (KLSE), before the Financial and Economic crisis. The samples of this study are taken from 106 public companies, listed on the Industrial Product of the Main board of the KLSE. The Simple Regression analysis is used to analyze the published, audited, accounting data of the firms between 1993-1997.
The result of this study indicates that to some extent, there are relationship between capital structure and the value of a firm. In summary, it can be said that even though the utilization of debt financing is high for the sample under study, financial leverage on its own can not increase the value of Malaysia public listed companies. |
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