Purpose

The purpose of this study is to examine the relationships between leverage and firm’s performance in Malaysia by framing the relationship under the tradeoff theory and agency cost theory.

Design/methodology/approach

Based on insights drawn from the existing literature, we opted for fixed effects and system two-steps GMM models to establish the hypothesized relationship between leverage and performance. We analyzed 528 nonfinancial firms listed on the Bursa Malaysia Stock exchange for the period of 12 years (2005–2016).

Findings

The outcomes show that the leverage ratio improves the firm performance, consistent with leverage serving as an effective strategy in constraining managers from building their personal empire, revealing a proportionately greater benefit for Malaysian firms than the cost to debt financing. The authors also find that a positive relationship between leverage and firm performance switch to the negative when the level of leverage reaches beyond the optimal level. Consequently, switching from positive to negative indicates that debt has a twofold (nonlinear) impact on firm performance.

Practical implications

Our research provides several implications to potential stakeholders. For investors, firms having lower leverage ratios could achieve superior performance, thus investing in corporations pursuing higher performance. Managers should therefore strive for achieving higher performance to meet the needs of investors and shareholders. From the researcher’s perspective, our research suggests the need to go away from the searching linear association between leverage and firm performance and the relevance of nonlinear correlation. Moreover, our research can help managers to understand how their lender relates to their debt to assets ratios. Thus, they can design an optimal level of leverage that not only improves the firm’s performance but also reduce the associated costs.

Originality/value

To the best of the author’s knowledge, this is the initial attempt in the context of Malaysia that documents evidence indicating that the lower leverage is likely to create value for shareholders while a higher debt ratio reduces firm profitability.

中文翻译：

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资本结构对公司绩效影响的实证研究：来自马来西亚的证据

目的

本研究的目的是通过在权衡理论和代理成本理论下构建关系来研究杠杆与马来西亚公司业绩之间的关系。

设计/方法/方法

基于从现有文献中得出的见解，我们选择了固定效应和系统两步 GMM 模型来建立杠杆和绩效之间的假设关系。我们分析了 12 年（2005 年至 2016 年）在马来西亚证券交易所上市的 528 家非金融公司。

发现

结果表明，杠杆比率提高了公司业绩，与杠杆作为限制经理建立个人帝国的有效策略相一致，显示马来西亚公司的收益比债务融资成本更大。作者还发现，当杠杆水平超过最佳水平时，杠杆与公司绩效之间的正相关关系会转为负相关。因此，从正面转变为负面表明债务对公司绩效有双重（非线性）影响。

实际影响

我们的研究为潜在的利益相关者提供了一些启示。对投资者而言，杠杆率较低的公司可以取得优异的业绩，从而投资于追求更高业绩的公司。因此，管理者应努力实现更高的绩效，以满足投资者和股东的需求。从研究人员的角度来看，我们的研究表明需要摆脱杠杆与公司业绩之间的线性关联以及非线性相关性的相关性。此外，我们的研究可以帮助管理人员了解他们的贷方与他们的债务资产比率之间的关系。因此，他们可以设计一个最佳的杠杆水平，不仅可以提高公司的业绩，还可以降低相关成本。

原创性/价值

据作者所知，这是在马来西亚背景下的初步尝试，有证据表明较低的杠杆可能为股东创造价值，而较高的债务比率会降低公司的盈利能力。