Capital Structure Determinants of Shariah Compliant Companies

Purpose: The study was empirically examining the capital structure determinants among shariah compliant companies in Malaysia between year 2003 and 2017.
Design/methodology/approach: Financial information of 181 non-financial shariah compliant companies were obtained from Data Stream for the period of 15 years. Five determinants were used which are profitability, potential growth, liquidity, tangibility and size of the companies in measuring the capital structure decision during the period. Analysis was done using panel data regression with fixed effect model for the estimation.
Findings: Finding showed that capital structure decisions of Shariah compliant companies are consistent with previous empirical evidence except for potential growth. Lots of research had been done on capital structure determinants, however most of the studies were focusing on developed and conventional market.
Research limitations/implications: Limited data coverage (areas, periods and determinants),
Practical implications: Generalization of the study will be more accurate if more comprehensive studies are being done in the future in-cooperating more estimation method and more proxies of capital structure as well as more determinants.
Originality/value: Studies on capital structure determinants among Islamic capital market are very limited.