Factors Influencing The Capital Structure Of Shari'ah Compliant Public Listed Companies In The Kuala Lumpur Stock Exchange (KLSE).
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Date
2009
Authors
Ahmed Digale, Abdi Aziz
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Abstract
The understanding of the Shari'ah principles is one of the most important issues that
companies must learn and train their employee to be clear towards the rules and
regulations of Shari'ah to practice as its is. Hence the Shari'ah is universal for all
humankind, its settles all the issues that human beings face in this world whether its
business or other things. The Shari'ah is built on two basic principles, namely: removal of
hardship(ra J alharaj) and the prevention of haram ( daf' a!darar) (Rosly 2005). This has
direct bearing to the Qur 'anic verse that "God never intended to make religion a means
of inflicting hardship" (22:78) and "God intends to make easy for you" ( 4:28). The
primary objective of this study is to examine the public listed companies which are under
Shari'ah compliance category are fulfilling the Shari'ah principals, by analyzing the
difference of compliance Criteria in tenns of Business Activities, Type of the Business,
President of the Company, The Percentage of Muslim Shareholders and Shari'ah
Supervisory Board, and also to investigate the difference between these companies in
terms of compliance criteria, and what are the factors affecting the adaptation of Shari' ah
compliance? A total of 506 companies listed in the Main Board of KLSE Malaysia were
selected a sample of 218 using stratified sampling method. 218 annual repots were
collected as cross-sectional year 2007 and analyzed using the SPSS Program. The results
revealed that President of the Company (POC) has significant influence on the
compliance criteria. Implications, limitations, and recommendations for future research
will be presented in this study.
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Keywords
The public listed companies which are under Shari'ah compliance category , are fulfilling the Shari'ah principals.