Estimating Dynamic Panel Model of Leverage Decision: Evidence from Malaysia

Irene Wei Kiong Ting
  • Procedia Economics and Finance, January 2016, Elsevier
  • DOI: 10.1016/s2212-5671(16)00033-2

Leverage Decision

What is it about?

This study contributes to firm leverage decisions by estimating the mean reversion towards target which is absent specifically in Malaysia context. Critically, the results of this study pave the way for a more advanced and mixed method approach to firm leverage decision in Malaysia

Why is it important?

The dynamic panel results show that Malaysian public listed companies adjust debt and the speed of adjustment is approximately 21% to 26% per annum (System Generalized Method of Moments). This indicates that Malaysian public listed firms adjust their leverage and change their financing following temporary deviations from target in order to return leverage towards its optimum

The following have contributed to this page: Dr. Ting Irene Wei Kiong