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Capital control regime and capital structure determinants: A Malaysian case

Dzolkarnaini, M N 2006, 'Capital control regime and capital structure determinants: A Malaysian case' , Malaysian Accounting Review, 5 (1) , pp. 1-41.

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    Abstract

    In light of 1997 Asian crisis, the adoption of capital control regime by Malaysian government on 1st September 1998 is very much controversial. Despite being highly criticised, it is argued that Malaysia has recovered nicely. On 21st July 2005, the government announced the scrapping of the seven-year-old ringgit's peg to the US dollar. As ringgit depegging marks a significant upliftment of one of the capital control policies, an early assessment of the policies' effectiveness is timely. This paper examines the impact of capital control on the leverage ratios of Malaysian companies during the period 1st September 1994 - 31st August 2002. Further, the paper investigates the issues of capital control and the capital structure determinants. Results indicate that (i) the capital control has significantly changed the overall leverage ratios between the pre and the post-capital control periods; (ii) the leverage level of Malaysian companies is mainly driven by three major factors, namely the company size, the profitability and the liquidity; and (iii) the capital control has a significant impact on the role of some capital structure determinants. With all these evidence, it is suggested that the capital control adoption is proven successful in stabilising the economy, at least in the medium-term.

    Item Type: Article
    Themes: Subjects / Themes > H Social Sciences > HG Finance
    Subjects / Themes > H Social Sciences > HF Commerce > HF5001 Business > HF5601 Accounting. Bookkeeping
    Subjects outside of the University Themes
    Schools: ?? sch_sbs ??
    Journal or Publication Title: Malaysian Accounting Review
    Publisher: Universiti Teknologi MARA and the Malaysian Accountancy Research & Education Foundation (MAREF)
    Refereed: Yes
    Related URLs:
    Depositing User: N Dzolkarnaini
    Date Deposited: 15 Feb 2010 09:42
    Last Modified: 07 Jan 2014 06:56
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    URI: http://usir.salford.ac.uk/id/eprint/3073

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