CAPITAL STRUCTURE THEORIES AN DEVIDENCEFIFROMM’SBURSAVALUE MALAYSIA CONSTRUCTION SECTOR

Abdul Razak Abdul Hadi, Nur Farah Nadiah Md Lazim

Abstract


This paper examines the relevance of Capital Structure theories to the performance of construction firms listed at Bursa Malaysia. Within the framework of Modigliani-Miller and Trade-Off theories, this paper uses Generalized Method of Moments as an estimation model employing yearly panel data over the observed period from 2010 through 2015. The test results from GMM indicate that earnings per share (EPS), dividend per share (DPS) and debt-equity ratio (D/E) have no significantdby relationshimarketpriceper share (MPPS). Even though the findings are rather shocking, one must admit there is an absence of Modigliani-Miller and Trade-Off theories in those construction firms at Bursa Malaysia. Obviously, this is an indication that the efficient market hypothesis prevails to a certain level at Bursa Malaysia.

Keywords


Modigliani-Miller Theory; Trade-Off Theory; Generalized Method of Moments; Panel Data Analysis; Efficient Market Hypothesis.

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