The moderating effect of the pandemic on capital structure and firm performance in Malaysia / Siti Nabilah Mohd Shaari and Nik Nurul Aswani Nik Kamarudin

• Main Authors: Mohd Shaari, Siti Nabilah, Nik Kamarudin, Nik Nurul Aswani
• Format: Article
• Language: English
• Published: Accounting Research Institute (ARI) and UiTM Press, Universiti Teknologi MARA 2024
• Subjects: Accounting. Bookkeeping; Financial management. Business finance. Corporation finance
• Online Access: https://ir.uitm.edu.my/id/eprint/95489/1/95489.pdf; https://ir.uitm.edu.my/id/eprint/95489/
• Institution: Universiti Teknologi Mara

This study aimed to examine the impact of capital structure on firm performance during the COVID-19 pandemic and its moderating effect on the relationship between capital structure and firm performance using a fixed-effect balanced panel data approach. The sample included all Malaysian public firms listed on the Main Market of Bursa Malaysia from 2018 to 2021. The study made a distinction between the prediction of results for long-term debts and total debts, considering the unique situation of the COVID-19 pandemic. The results showed that while total debts negatively affected firm performance, long-term debts, however, affected firm performance positively due to the higher liquidity position offered by them. This study also found evidence that the COVID-19 pandemic significantly reduced the adverse impact of debt on firm performance, most likely due to the societal and monetary aid offered by the Malaysian government throughout the pandemic.