Determinants of capital structure among the public-listed plantation companies in Malaysia

Awareness of capital structure requires decision-making skills which refers to the art of tackling complex situations. Capital structure is a part of the financial structure and refers to the proportion of the various long-term sources of financing. The present study investigated the controlling determinants of the capital structure of a selected industry in Malaysia. The determinants to be investigated are, namely; the size, growth, leverage, liquidity, operating cash flow and return on assets which are the variables of the present study. The selected industry in Malaysia is the plantation industry. The data was collected from 40 public-listed plantation companies, using secondary data from the companies’ annual financial reports. The statistical test conducted on the data gathered shows that there are no significant relationships between three of the variables tested, namely; size, leverage and OCF and the dependent variable; return on asset. However, the results also indicated that there are significant relationships between the growth of the companies and liquidity value in the companies with the return on asset of the companies. This study discovered that out of the five variables, there are two variables, namely growth and liquidity which significantly influences the capital structure of public-listed companies in the plantation sector in Malaysia.