Journal of Engineering and Applied Sciences
ISSN: Online 1818-7803ISSN: Print 1816-949x
102
Views
0
Downloads
Capital Structure Speed of Adjustment and Shari’ah Compliance: Empirical Evidence from Malaysia
Hafezali Iqbal Hussain, H. Obsatar Sinaga, M. Haizam M Saudi, Firdaus Hilmi Nadzri, Nur Surayya M. Saudi, Mohd Nazrul Azizi and Mohd Farid Shamsudin
Page: 2103-2107 | Received 21 Sep 2022, Published online: 21 Sep 2022
Full Text Reference XML File PDF File
Abstract
The study 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.
How to cite this article:
Hafezali Iqbal Hussain, H. Obsatar Sinaga, M. Haizam M Saudi, Firdaus Hilmi Nadzri, Nur Surayya M. Saudi, Mohd Nazrul Azizi and Mohd Farid Shamsudin. Capital Structure Speed of Adjustment and Shari’ah Compliance:
Empirical Evidence from Malaysia.
DOI: https://doi.org/10.36478/jeasci.2018.2103.2107
URL: https://www.makhillpublications.co/view-article/1816-949x/jeasci.2018.2103.2107