Determinants of financing choices in the Malaysian public listed companies

This study provides evidence concerning the key determinant factors that influence the choice of securities issuance amongst Malaysian public listed companies for the period of
2000-2009. Two major types of securities namely long term debt and common equity is examined. With regards to the long term debt. the study segregates the debt instruments into Islamic debt (sukuk) and conventional debt while the equity offering focuses on the rights issue. In examining the securities choice between the securities, three different groups are used as samples. namely conventional debt and equity, Islamic debt and equity and all debt
as well as equity are studied. Besides. this study also investigates the choice between Islamic debt and conventional debt. This is among the first study that investigates the choice of Islamic debt as compared to other financial product as Islamic and conventional products are offered alongside. Using logistic regressions to identify factors that influence choice of related financial instrument. results from this studu suggests that firm specific variables play a more prominent role compared to governance variables in determining corporate choice.
Specifically. four variables (domestic private fund ownership, firm size, issue size and adjusted run-up) are consistently significant in the all three debt-equity sample groups. With regards to governance variables, managerial ownership, Bumiputera ownership and board
size are significant to some degree in certain sample groups. As for Islamic debt and conventional debt, only the board size and adjusted run-up can explain the difference
between the two. In general, the results of this study contribute further to the existing literature by providing evidence that debt-equity choice in Malaysia fully support market timing hypothesis. and partial support agency and trade off theory.