Abstract

This empirical study is driven by the motivation to evaluate the impact of a capital structure, dividend policy and earnings after tax on the financial sustainability of listed transportation and logistics companies in Bursa Malaysia. Specifically, this study zooms into investigating the financial strength of 12 Sharia-compliant companies which are listed in the Transportation & Logistics sector. This study employs static panel data estimation methods to evaluate the intensity of the relationship between the predictors and financial performance of those Sharia-compliant companies (measured by closing share price) within the framework of capital structure theories. This study uses cross-sectional and yearly time series data spanning over five years from 2018 till 2022. The empirical findings from Pooled OLS and two-way Fixed Effect model indicate that capital structure and dividend policy are significant determinants of company's value. As such, the combination of debt and equity financing is one of critical factors in augmenting the company’s financial resilience. In terms of earnings quality, the Transportation & Logistics sector outperforms the Telecommunications & Media sector during the observed period. A strong positive significant correlation between dividend per share (DPS) and share price (CP) is also observed in this Transportation & Logistics sector. It is therefore clear to us that the Trade-off and Bird-in-the-Hand theories provide meaningful enlightenments on the variability of the performance of the Sharia-compliant companies in Transportation & Logistics sector at Bursa Malaysia.