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Political connection and corporate financing decision: Evidence from Malaysia

Siti Nurhanani, Hassan (2016) Political connection and corporate financing decision: Evidence from Malaysia. Masters thesis, Universiti Utara Malaysia.

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Abstract

This study investigates the impact of political connection on corporate financing decision of 292 firms listed in Bursa Malaysia from 2006-2015. Existing studies document that firms with political connection tend to have more debt because they have close relationship with the government, which enable them to have easier access to loans. Employing a sample of trading & service sector and industrial products sector, the result of this study concludes that politically connected firms in Malaysia prefer debt to finance their operations This study also employs firm size (SIZE), firm growth (GROWTH), profitability (PROFIT), liquidity (LIQUID) and asset tangibility (TANG) to determine the other factors that influence corporate financing decision. The results show that SIZE, PROFIT and LIQUID have a negative relationship with total debt ratio (LEV). This implies that larger firms and more profitable firms less prefer debt as their sources of financing. Firms with high liquidity also tend to use their equity as internal sources of finance instead of debt. Meanwhile, TANG has a positive relationship with LEV, indicating that Malaysian firms with greater amount of tangible assets prefer debt as their sources of financing.

Item Type: Thesis (Masters)
Uncontrolled Keywords: Political Connection, Debt, Financing, Malaysia.
Subjects: H Social Sciences > HG Finance
Divisions: School of Economics, Finance & Banking
Depositing User: Mr. Badrulsaman Hamid
Date Deposited: 02 Mar 2017 09:53
Last Modified: 02 Mar 2017 09:53
URI: http://etd.uum.edu.my/id/eprint/6081

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