Capital structure and firm performance during and after the global financial crisis among Malaysia listed companies

This research investigates the relationship between capital structure and firm performance during and after the global financial crisis among Malaysian listed companies. The research uses a panel data approach on a sample of 278 non-financial listed companies. The regression models reveal that Tobin`s Q ratio has a significant positive relationship with long term debt and growth, both during and after the global financial crisis. In addition, a significant negative relationship between return on assets and long term debt, short term debt, total debt, was found during and after the financial crisis. The findings imply that Malaysian listed companies should immunize themselves against any financial crisis by maintaining lower short-term debt ratio, because most of these non-financial companies are financed with a higher amount of short-term debt rather than long-term debt. The significant negative relationship between performance and the variables long term debt, short term debt, and total debt do not support the “capital structure irrelevancy theory”, because the lower the amount of debt in the
capital structure the better the performance of the sampled companies.