Abstract:

The capital structure is usually influenced by the specific characteristics of the firm itself, including internal factors and external. Determination of the optimal capital structure is very important to reduce the risk of bankruptcy of the firm as most business organizations are constantly involved in financing activities. This study investigates an empirical issue which has received little attention in the literature; the determinants of capital structure among firms in developing countries. Thus the main objectives of this study are to determine the composition of the capital structure of the Malaysian large companies and to examine the relationship between firms’ characteristics and capital structure composition. This study will examine the determinants of the capital structure such as asset tangibility, profitability, firm size, liquidity, and non-debt tax shield which may have significant associations with the firm capital structure. This study adds new empirical evidence to the body of knowledge by exploring the relationship between firm characteristics and capital structure from the perspectives of large firms from a developing country.