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Profitability and Capital Structure of the Property and Construction Sectors in Malaysia

Author/s: Wan Mansor Wan Mahmood, Rozimah Zakaria

Date Published: 1/01/2007

Published in: Volume 13 - 2007 Issue 1 (pages 92 - 105)

Abstract

This study examines the profitability and capital structure among property developers and constructors in emerging market of Malaysia. Using the sample of 25 property companies and 20 construction companies for a period of eight years, the present study suggests that developers are more profitable than contractors due to the fact that their capital gearing and debt equity ratio are less than those of contractors. The results from the regression analysis indicate that capital gearing is negatively related with net profit margins and price earning ratio for both property and construction sectors. The findings show unequal business relationship with regards to debt and profit even though their business is very interrelated.

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Keywords

Capital Structure - Contractor - Profitability - Property Developer

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