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https://www.um.edu.mt/library/oar/handle/123456789/33296
Title: | The impact of Sharia compliance on the adjustment to target debt maturity of Malaysian firms |
Authors: | Hussain, H. I. Shamsudin, M. F. Anwar, N. A. M. Salem, M. A. Jabarullah, Noor H. |
Keywords: | Banks and banking -- Malaysia Islamic courts -- Malaysia Debt relief (Islamic law) -- Malaysia Banks and banking -- Islamic countries Finance -- Islamic countries Finance -- Malaysia Banks and banking -- Religious aspects -- Islam Finance -- Religious aspects -- Islam |
Issue Date: | 2018 |
Publisher: | University of Piraeus. International Strategic Management Association |
Citation: | Hussain, H. I., Shamsudin, M. F., Anwar, N. A. M., Salem, M. A., & Jabarullah, N. H. (2018). The impact of Sharia compliance on the adjustment to target debt maturity of Malaysian firms. European Research Studies Journal, 21(2), 48-61. |
Abstract: | This paper investigates the speed of adjustment to target debt maturity for a sample of Malaysian firms based on the sample period of 2007 to 2016. We examine the impact of Sharia compliance on the speed of adjustment to target debt maturity structure by grouping companies based on nature of compliance to Sharia requirements which is categorised by the Securities Commission of Malaysia. In line with our expectations, the analysis shows that firms classified as Sharia compliant tend to adjust at more rapid rates to target debt maturity when below target levels suggesting that compliant firms are able to issue long-term debt at cheaper levels relative to non-compliant counterparts. In addition, the reverse is observed when evaluating firms above target levels where non-compliant firms adjust at more rapid rates. Our findings indicate that compliant firms are able to raise long-term debt at cheaper rates relative to non-compliant firms given the captive market situation observed in the Islamic capital markets in Malaysia. This does however indicate the potential for higher agency costs as well as greater levels of information asymmetry for compliant firms relative to non-compliant firms given that non-compliant firms are more willing to reduce maturity structures to reach target levels when above target levels. |
URI: | https://www.um.edu.mt/library/oar//handle/123456789/33296 |
ISSN: | 11082976 |
Appears in Collections: | European Research Studies Journal, Volume 21, Issue 2 |
Files in This Item:
File | Description | Size | Format | |
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The_Impact_of_Sharia_Compliance_on__the_Adjustment_to_Target_Debt_2018.pdf | 343.97 kB | Adobe PDF | View/Open |
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