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

Pacific Rim Property Research Journal, Spring 2007

Posted: 14 Feb 2007

See all articles by Wan Mansor Mahmood

Wan Mansor Mahmood

Universiti Teknologi MARA (UiTM)

Rozimah

Universiti Teknologi MARA (UiTM)

Abstract

This study examines the profitability and capital structure among property developers and constructors in emerging market of Malaysia. The findings are compared and contrasted. In many literatures, the finding that developers are larger and more profitable compared to contractors' counterparts is well documented. 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 of the present study show unequal business relationship with regards to debt and profit even though their business is very interrelated. The findings of this paper will help financial institutions and markets to better facilitate property and construction financing in the context of Malaysia property and construction market in the future.

Keywords: Profitability, Capital Structure, Property Developer, Contractor

JEL Classification: L85

Suggested Citation

Wan Mahmood, Wan Mansor and Zakaria, Rozimah, Profitability and Capital Structure of the Property and Construction Sectors in Malaysia. Pacific Rim Property Research Journal, Spring 2007, Available at SSRN: https://ssrn.com/abstract=963057

Wan Mansor Wan Mahmood (Contact Author)

Universiti Teknologi MARA (UiTM) ( email )

Sura Hujung
Dungun, Terengganu 23000
Malaysia
609 8403774 (Phone)
609 8403777 (Fax)

HOME PAGE: http://www.tganu.uitm.edu.my/

Rozimah Zakaria

Universiti Teknologi MARA (UiTM) ( email )

40450 Shah Alam
Johor
Dungun, Selangor 23000
Malaysia

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