Ownership Structure And Capital Structure Essay
THE INTERACTION BETWEEN OWNERSHIP STRUCTURE AND CAPITAL STRUCTURE IN FINANCE SECTOR
Chapter 1: Introduction
1. Background of the study
Capital structure is how a firm manages a large amount of money, particularly by governments or large companies from overall operations and growth by using different type sources of funds.
Distribution of equity defined the ownership structure as relating to votes and capital and also identifies of the equity owners. According to Jensen and Meckling (1976), who discussed the nature of agency costs associated with outside claims on the firm - both debt and equity. Institutional ownership that is outside ownership does refer to the ownership stake in a company that is held by large financial organizations, pension
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Problem statement
This study aims to investigate the relationship between ownership structure and capital structure in an emerging market by using data relating to companies listed on the Main Board of Bursa Malaysia.
3. Research question
This paper tries to provide an answer to the question below:
a) Does dividend negatively relate to the leverage in Malaysia?
b) Does profitability negatively relate to the leverage in Malaysia?
c) Does liquidity positively relate to the leverage in Malaysia?
d) Does growth rate positively relate to the leverage in Malaysia?
4. Research objective
The objectives of this study are:
a) To identify the relationship between dividend and institutional ownership in Malaysia.
b) To identify the relationship between profitability and institutional ownership in Malaysia.
c) To identify the relationship between liquidity and institutional ownership in Malaysia.
d) To identify the relationship between growth rate and institutional ownership in Malaysia.
5. Significant of the study
This study try to stress the importance of capital structure toward ownership structure and to identify leverage measured by total debt to total asset ratio as variable of capital structure in an emerging market do affect the ownership structure in institutional ownership the most and help the outsides ownership to make better decision and avoid of
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