Gearing Differences Across Malaysian Public Listed Companies

Abstract

Abstract: It is sometimes purported that one of the factors affecting a firm's value is its capital structure. The main objective of this research is therefore to examine capital structure differences among 572 companies listed on the main board and second board of KLSE and to examine the gearing patterns following the 1997 financial crisis. Using the analysis of variance (ANOVA) and Kruskal-Wallis statistical tests, the findings clearly indicate the existence of gearing differences between the main board and the second board, and within the sectors of the main board companies The results also show that the gearing ratio for both boards gradually increase from the period of pre-crisis to post-crisis. Any increase in gearing following the crisis may partly be attributed to either one of the following reasons: a general trend of increasing the debt ratio or firms do indeed employ more debts due to the crisis.