UNIMAS Review of Accounting and Finance

Financial Ratios and Portfolio Construction

Su Yee Kong — 2024-12-31

This paper aims to provide empirical evidence of portfolio construction using the current, return on equity, and debt-to-equity ratio across the top three industries in Malaysia. This study analysed 30 companies listed on Bursa Malaysia from three different industries: the energy industry, the plantation industry, and the consumer products and services industry. We find that all 17 portfolios generate positive returns except Portfolio 12. There is no statistically significant difference between the mean of the portfolio with the highest ratios and the mean of the portfolio with the lowest ratios for the three financial ratios. The results of the study provide valuable insight for portfolio managers and investors.

Factors Influencing Financial Performance of Takaful Firm In Malaysia

Nur Adila Syahzanni Mohd Izanni — 2024-12-31

The objective of this study is to analyze the relationship between the internal factors and the financial performance of takaful companies in Malaysia. The internal factors that were tested are liquidity (LQ), return on equity (ROE), leverage (LV), and size of the firm (SIZE). The financial performance of takaful firms is measured by using the return on assets (ROA) ratio. The study uses pecking order theory as the basis for explaining the disclosure of the financial performance of the firms involved. The type of data used in this research is secondary data, that are retrieved from the company’s annual report. The number sample in this study used is 6 takaful firms listed in Bursa Malaysia with observations year from 2016-2020. To analyze the relationship between all internal factors and takaful firm’s financial performance, the study uses Descriptive statistics, Corelation analysis, Durbin-Watson test (OLS), White test and Variance Inflation factors. To determine the suitable model, the Hausman test is used. The result of this research shows that liquidity level and leverage have a negative insignificant effect on takaful firm’s financial performance while return on equity and size of the firm is positively insignificant.

Effect of Fundamental Factor Analysis on Blue Chip Stock Return In Malaysia After The Outbreak of Covid-19 Pandemic

Jefferson Tiong Kung Lien — 2024-12-26

This study examines the effects of fundamental factors on the returns of Malaysian blue-chip stocks following the outbreak of the COVID-19 pandemic. Using secondary data from 2020 to 2022, this research analyzes key financial ratios, including return on equity (ROE), price-to-book ratio (P/B), debt-to-equity ratio (D/E), price-to-earnings ratio (P/E), dividend payout ratio (DPR), and net profit margin (NPM), to determine their influence on stock returns. The dataset comprises panel data of 30 blue-chip companies, resulting in 90 observations. The analysis, conducted using EViews 12, reveals that ROE has a significant negative relationship with stock returns, while P/B and D/E have positive and significant relationships. In contrast, P/E, DPR, and NPM exhibit negative but insignificant relationships.

The findings suggest that P/B and D/E are critical factors for investors when evaluating blue-chip stocks, while ROE warrants cautious interpretation due to its inverse relationship with returns. However, the study is limited by its focus on fundamental analysis, excluding technical analysis, and its short time frame of three years. These limitations indicate the need for further research with broader datasets and alternative analytical approaches. The results have practical implications for investors, portfolio managers, and policymakers. Investors are encouraged to prioritize fundamental factors such as P/B and D/E when making investment decisions, while policymakers can leverage these insights to enhance regulatory frameworks supporting informed decision making in Malaysia's capital markets. This study contributes to the understanding of stock performance during a period of significant economic disruption and offers a foundation for future research in post-pandemic financial analysis.

Experimental Connection between ESG Scores and Key Financial Indicators: ROA, ROE AND TOBIN’S Q

Azrul Hazim Fahrullah — 2024-12-26

This study explores the relationship between Environmental, Social, and Governance (ESG) practices and the financial performance of Malaysian listed firms, focusing on key financial indicators such as Return on Assets (ROA), Return on Equity (ROE), and Tobin’s Q (TQ). Using a quantitative approach, panel data from 30 publicly traded Malaysian companies between 2018 and 2020 was analysed through Ordinary Least Squares (OLS) and Generalized Least Squares (GLS) regression models. The findings demonstrate a significant positive relationship between ESG scores and ROA, indicating that firms with stronger ESG commitments tend to perform better in terms of asset returns. However, the relationship between ESG and ROE or Tobin’s Q is less conclusive, with mixed results across different model specifications. Variables such as firm size, leverage, and liquidity showed no consistent impact on financial performance. The study highlights the financial benefits of ESG adoption for Malaysian companies and provides insights for investors pursuing sustainable investment strategies. These findings offer practical implications for firms seeking to enhance their competitiveness by integrating ESG practices into their operations.

Credit Risk Management and Its Effect on Financial Performance between Conventional and Islamic Banks in Malaysia

Chai Hung Chong — 2024-12-28

Banks are essential to a nation's economic development. In order to guarantee banks can remain in the financial sector, risks must effectively be managed in this sector. The main goal of this research is to gaze into the link between credit risk management (CRM) and the financial performance (FP) of conventional and Islamic banks in Malaysia. The sample collected for this empirical study covered twelve years of data from 2011 until 2022. The sample for this study is consist of 15 conventional and 15 Islamic banks in Malaysia. Regression analyses are used to determine the impact of CRM and its components namely non-performing loans ratio (NPLR), capital adequacy ratio (CAR), and loan-to-deposit ratio (LDR) on the banks’ performance which is measured by return on assets (ROA) and return on equity (ROE). The results revealed that NPLR and CAR in conventional banks had a significant negative relationship with the profitability in terms of ROA. However, only CAR had a significant relationship with Islamic banks’ performance. Furthermore, the findings showed a significant negative association between CAR and LDR on conventional banks’ profitability as measured by ROE. Whereas NPLR and CAR significantly negative associated with Islamic banks' ROE. This study could provide empirical evidence for bank manager and regulators in Malaysia to help them better understand the risks of banks so that they can formulate better policies to promote prudent management and decision-making.

From Taxes to Prosperity: The Role of Tax Revenue in Malaysia’s Economic Growth

Siew Wai Teh — 2024-12-28

This study examines the relationship between Malaysia economic growth and tax revenue. The data were taken from year 2011 to 2020 from the World Bank and OECD. The data were analyzed using the descriptive analysis, correlation, Variance Inflation Factor (VIF), and Ordinary Least Squares (OLS). This study reveals a high and positive link between OT and GDP and between SCC and GDP, a very strong and positive relationship between PCG and GDP, a very weak and negative relationship between TGS and GDP, and a moderate and negative relationship between TP and GDP. In conclusion, the study on the relationship between tax revenues and economic growth in Malaysia has significant policy consequences and provides insightful information. The awareness of this association may help lawmakers create fiscal policies that encourage sustained economic growth, including the right tax rates, incentives, and structures. Furthermore, it could assist with resource allocation, budget planning, and predicting future tax revenues.

Analyzing the Resilience and Impact of Islamic Stock Markets Before and After the Covid-19 Pandemic in Malaysia

Nur Ikhwan Amran — 2024-12-28

The study aims to investigate the relationships between Total Return (TR) on Islamic stock prices and key economic indicators such as GDP growth rate, interest rate, and Foreign Direct Investment. Data for the analysis is obtained from financial statements downloaded from Bursa Malaysia and The World Bank Data. The research seeks to shed light on how these economic factors influence the Total Return of Islamic stock markets, providing insights into the performance and behavior of Islamic stock markets in Malaysia. The findings emphasize the significant impact of GDP growth rate, interest rate, and Foreign Direct Investment on the performance of Islamic stock markets, offering valuable implications for investors and policymakers in the Islamic finance sector.

The Relationship between Financial Risks and Commercial Banks' Performance in Malaysia

Mohamad Razim Ikmal Idris — 2024-12-29

This research examines the relationship between financial risks and the performance of commercial banks in Malaysia from 2018 to 2022. Financial risks considered include operational risk, credit risk, and liquidity risk. The study aims to identify how these risks impact the efficiency and stability of commercial banks, and how such risks influence investor confidence and capital inflows. Using data from various Malaysian commercial banks, this study employs regression analysis and diagnostic tests to assess the significance and strength of the relationships between different types of financial risks and bank performance. The findings contribute to a better understanding of the financial dynamics within the Malaysian banking sector, providing valuable insights for investors and financial analysts to make informed decisions. This research is crucial given the increased financial uncertainties and economic challenges in the post-COVID-19 era.

The Influence of United States’ Inflation Rate, Interest rate and Bitcoin Towards Gold Price

Chuan Haw Wee — 2024-12-29

The purpose of this paper is to investigate the influence of inflation rate and interest rate of The United States towards the gold’s price. Besides that, the movement of Bitcoin and gold has also been examined in this paper. The past 30 years of historical data of the inflation rate, interest rate and the gold’s price has been applied in this study to examine the effect of inflation and interest rate towards the gold price. Other than that, the past 30 months of the Bitcoin’s price has also been applied in the research. Through the research, it has found that the inflation rate and the interest rate have a negative relationship with the gold’s price. In addition, this paper has also shown that the movement of Bitcoin’s price and gold’s price is in a same direction. In other words, the movement of these assets is positively correlated in which when the Bitcoin price’s increase, the price of gold is also increase.

A Study of Malaysian Pharmaceutical Companies on Financial Leverage and Firm Performance

Nurul Syuhada Zaidi — 2024-12-31

This study investigates the relationship between financial leverage and firm performance among pharmaceutical companies in Malaysia, with specific objectives of assessing the impact of debt-to-equity ratio (DR) and interest rates on return on assets (ROA). Using a sample of seven publicly traded pharmaceutical firms listed on Bursa Malaysia and secondary data derived from their financial statements for the period of 2011-2020, the study evaluates firm size, liquidity, and profitability as key variables. The results reveal a significant positive relationship between financial leverage and ROA, contrary to prior studies that report a negative correlation. Firm size emerges as a critical factor, with larger firms exhibiting higher profitability but also a greater likelihood of financial distress. The findings suggest that Malaysian pharmaceutical companies should strategically manage their debt-to-equity ratios, optimize resource allocation, and explore research and development opportunities to enhance performance. Future research should expand the dataset to include firms outside the main market and investigate additional factors, such as short-term and long-term debt, influencing firm performance.

Determinants of Youth Bankruptcy in Malaysia

Dayang Nur Abidah Abang Zainudin — 2024-12-31

The aim of this research is to explore the determinants influencing youth bankruptcy in ten Malaysian states from 2015 to 2022. Utilizing panel data analysis, the study investigates how economic measures such as youth unemployment rate, non-performing loans, per capita income, and the consumer price index impact youth bankruptcy rates. The results indicate significant relationships between youth bankruptcy and economic indicators, with higher youth unemployment and inflation rates being linked to increased bankruptcy rates, while higher per capita income decreases the likelihood of bankruptcy. The results of this study shall have implication to policy makers.