Debt maturity and stock returns: an inter-sectoral comparison of Malaysian firms
This firm-level study examines whether the effects of financial leverage on stock returns of 12 Bursa Malaysian sectors can be explained by debt maturity. When total leverage is used, only 3 out of 12 sectors exhibit a significant relationship with stock returns. However, when the leverage is divide...
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| Format: | Article |
| Language: | English |
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Asian Academy of Management (AAM) and Penerbit Universiti Sains Malaysia
2016
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| Online Access: | http://psasir.upm.edu.my/id/eprint/56410/1/Debt%20maturity%20and%20stock%20returns%20an%20inter-sectoral%20comparison%20of%20Malaysian%20firms.pdf |
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| author | Lau, Wei Theng Law, Siong Hook Md Nassir, Annuar |
| author_facet | Lau, Wei Theng Law, Siong Hook Md Nassir, Annuar |
| author_sort | Lau, Wei Theng |
| collection | UPM |
| description | This firm-level study examines whether the effects of financial leverage on stock returns of 12 Bursa Malaysian sectors can be explained by debt maturity. When total leverage is used, only 3 out of 12 sectors exhibit a significant relationship with stock returns. However, when the leverage is divided by using short-term and long-term debt, regressions in 9 out of 12 sectors reveal that either form of disaggregated leverage exhibits a significant relationship with returns at least at a 5% significance level. The results suggest that the return-leverage relationship could be indirect in terms of maturity. The panel regressions also show that sector-specific analysis is more meaningful and practical due to the mixed relationship identified. The empirical conclusions are further supported by using two indicators of financial leverage, i.e. book leverage and market leverage. The results are robust when the firm and the time effects are taken into consideration. |
| first_indexed | 2024-03-06T09:26:19Z |
| format | Article |
| id | upm.eprints-56410 |
| institution | Universiti Putra Malaysia |
| language | English |
| last_indexed | 2024-03-06T09:26:19Z |
| publishDate | 2016 |
| publisher | Asian Academy of Management (AAM) and Penerbit Universiti Sains Malaysia |
| record_format | dspace |
| spelling | upm.eprints-564102017-07-31T09:17:25Z http://psasir.upm.edu.my/id/eprint/56410/ Debt maturity and stock returns: an inter-sectoral comparison of Malaysian firms Lau, Wei Theng Law, Siong Hook Md Nassir, Annuar This firm-level study examines whether the effects of financial leverage on stock returns of 12 Bursa Malaysian sectors can be explained by debt maturity. When total leverage is used, only 3 out of 12 sectors exhibit a significant relationship with stock returns. However, when the leverage is divided by using short-term and long-term debt, regressions in 9 out of 12 sectors reveal that either form of disaggregated leverage exhibits a significant relationship with returns at least at a 5% significance level. The results suggest that the return-leverage relationship could be indirect in terms of maturity. The panel regressions also show that sector-specific analysis is more meaningful and practical due to the mixed relationship identified. The empirical conclusions are further supported by using two indicators of financial leverage, i.e. book leverage and market leverage. The results are robust when the firm and the time effects are taken into consideration. Asian Academy of Management (AAM) and Penerbit Universiti Sains Malaysia 2016 Article PeerReviewed application/pdf en http://psasir.upm.edu.my/id/eprint/56410/1/Debt%20maturity%20and%20stock%20returns%20an%20inter-sectoral%20comparison%20of%20Malaysian%20firms.pdf Lau, Wei Theng and Law, Siong Hook and Md Nassir, Annuar (2016) Debt maturity and stock returns: an inter-sectoral comparison of Malaysian firms. Asian Academy of Management Journal of Accounting and Finance, 12 (2). pp. 37-63. ISSN 1823-4992; ESSN: 2180-4192 http://web.usm.my/journal/aamjaf/vol12_2_2016.html |
| spellingShingle | Lau, Wei Theng Law, Siong Hook Md Nassir, Annuar Debt maturity and stock returns: an inter-sectoral comparison of Malaysian firms |
| title | Debt maturity and stock returns: an inter-sectoral comparison of Malaysian firms |
| title_full | Debt maturity and stock returns: an inter-sectoral comparison of Malaysian firms |
| title_fullStr | Debt maturity and stock returns: an inter-sectoral comparison of Malaysian firms |
| title_full_unstemmed | Debt maturity and stock returns: an inter-sectoral comparison of Malaysian firms |
| title_short | Debt maturity and stock returns: an inter-sectoral comparison of Malaysian firms |
| title_sort | debt maturity and stock returns an inter sectoral comparison of malaysian firms |
| url | http://psasir.upm.edu.my/id/eprint/56410/1/Debt%20maturity%20and%20stock%20returns%20an%20inter-sectoral%20comparison%20of%20Malaysian%20firms.pdf |
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