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The Impact Of Leverage On Investment : Evidence From Shariah Listed Firms

Abd. Ghafar Ismail, Masturah Ma'in and Nizam Ahmat

(Research Center for Islamic Economics and Finance, Universiti Kebangsaan Malaysia)

Abstract:

This study examines the impact of leverage on firms’ investment decisions using information on Malaysian shariah listed firms between 2000 and 2007. From the theory,leverage is one mechanisms for overcoming the overinvestment problem, suggesting a negative relationship between debt and investment for firms with low growth opportunities. This paper extends the previous literatures by using a panel data methodology. It shows that the leverage and to alternative empirical models. However, this negative effect is not significant only for firms with low growth opportunities (lower Q) but also refers to firms with high growth opportunities (high Q).

 

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JMIFR - Vol 8, No.1 2011 - Part 6.pdf

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