ISSN: 2225-8329
Open access
This research investigates the influence of the Effective Tax Rate (ETR) and capital structure (CAPS) on the financial performance (FP) of telecommunications companies listed in Bursa Malaysia. The analysis utilizes a sample of 52 firms data form 2011-2023. The study employs both ordinary least squares (OLS) regression and fixed effect models to investigate the links between effective tax rate (ETR), debt ratio (DR), long-term debt (LTD), asset tangibility (AT), and firm size (FS) in relation to return on assets (ROA). The findings demonstrate that ETR exerts a substantial negative impact on ROA, but DR exhibits a considerable positive correlation. LTD demonstrates a favorable effect on ROA in the OLS model, however it shows a negative effect in the Fixed Effect Model. AT and FS exhibit inconsistent and negligible impacts among models. The results indicate that proficient tax administration and smart loan usage are essential for improving FP in the telecommunications industry. The research underscores the necessity for a sophisticated strategy for long-term financing and the significance of accounting for sector-specific variables. These insights can assist managers and policymakers in making educated decisions to enhance financial results.
Ahmed, A. M., Nugraha, D. P., & Hágen, I. (2023). The relationship between capital structure and firm performance: the moderating role of agency cost. Risks, 11(6), 102. https://doi.org/10.3390/risks11060102.
Ahmed, A. M., Sharif, N. A., Ali, M. N., & Hágen, I. (2023). Effect of firm size on the association between capital structure and profitability. Sustainability, 15(14), 11196.
Akyildiz, I. F., Kak, A., & Nie, S. (2020). 6G and beyond: The future of wireless communications systems. IEEE access, 8, 133995-134030.
Birhane, M., Borji, B., Amentie, C., & Kant, S. (2024). Mediating Effect of Human Capital on the relation between Capital Structure and Firm Performance. Horn of African Journal of Business and Economics (HAJBE), 7(1), 135-154.
Boshnak, H. (2023). The impact of capital structure on firm performance: evidence from Saudi-listed firms. International Journal of Disclosure and Governance, 20(1), 15-26.
Bui, T. N., Nguyen, X. H., & Pham, K. T. (2023). The effect of capital structure on firm value: A study of companies listed on the Vietnamese stock market. International Journal of Financial Studies, 11(3), 100.
Capon, N., Farley, J. U., & Hoenig, S. (1990). Determinants of financial performance: a meta-analysis. Management science, 36(10), 1143-1159.
Christensen, D. M., Kenchington, D. G., & Laux, R. C. (2022). How do most low ETR firms avoid paying taxes?. Review of Accounting Studies, 27(2), 570-606.
Dao, B. T. T., & Ta, T. D. N. (2020). A meta-analysis: capital structure and firm performance. Journal of Economics and Development, 22(1), 111-129. https://doi.org/10.1108/JED-12-2019-0072
Enebeli, J. P. (2024). Information And Communication Technology (Ict), Globalization And Inpeneding Challenges. Global Journal of Pure and Applied Sciences, 30(1), 95-100.
Guantai, P. K. (2023). Effect of Capital Structure on Financial Performance of Firms in Energy Sector in Kenya (Doctoral dissertation, University of Nairobi).
Gündüz, D., Qin, Z., Aguerri, I. E., Dhillon, H. S., Yang, Z., Yener, A., ... & Chae, C. B. (2022). Beyond transmitting bits: Context, semantics, and task-oriented communications. IEEE Journal on Selected Areas in Communications, 41(1), 5-41.
Ioana, B. (2018). Tax impact on the financial performance of companies (Doctoral dissertation, A thesis submitted to the University of Vintil? Georgeta available at https://updoc. tips/.../free-pdf-ebook-bolborosioana-tax-impact-on-the-financial-performance accessed on 15 March).
Kantudu, A. S., Saidu, H., & Jikan-Jatum, A. M. (2018). Corporate Taxation and Financial Performance: The Moderating Role of Dividend Payout of Listed Consumer Goods Companies in Nigeria. Special Edition, March 2018, 4.
Katz, R., & Jung, J. (2023). The impact of taxation in the telecommunications industry. Information Economics and Policy, 62, 101016.
Kolluru, D. S., & Reddy, P. B. (2021). Review on communication technologies in telecommunications from conventional telephones to smart phones. In AIP Conference Proceedings (Vol. 2407, No. 1). AIP Publishing.
Krishna, A. (2013). Addressing the critical issues for successful international market penetration by Malaysian telecommunications firms (Doctoral dissertation, Southern Cross University.).
Kruk, S. (2021). Impact of capital structure on corporate value—review of literature. Journal of Risk and Financial Management, 14(4), 155. https://doi.org/10.3390/jrfm14040155
Mansour, M., Hashim, H. A., Almaqtari, F. A., & Al-ahdal, W. M. (2023). A review of the influence of capital structure on the relationship between corporate governance and firm performance. International Journal of Procurement Management, 17(1), 79-105.
Mbevi, A. M. (2023). Effect of Taxation on Financial Performance of Telecommunication Companies in Kenya (Doctoral dissertation, University of Nairobi).
Meese, J., & Wilken, R. (2024). Mobile media and telecommunications. In The Media and Communications in Australia (pp. 241-251). Routledge.
Mehzabin, S., Shahriar, A., Hoque, M. N., Wanke, P., & Azad, M. A. K. (2023). The effect of capital structure, operating efficiency and non-interest income on bank profitability: new evidence from Asia. Asian Journal of Economics and Banking, 7(1), 25-44.
Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance and the theory of investment. The American economic review, 48(3), 261-297.
Nguyen, S. L., Pham, C. D., Truong, T. V., Phi, T. V., Le, L. T., & Vu, T. T. T. (2023). Relationship between capital structure and firm profitability: Evidence from Vietnamese listed companies. International Journal of Financial Studies, 11(1), 45.
Otuya, S., & Omoye, A. S. (2021). Thin capitalisation, effective tax rate and performance of multinational companies in Nigeria. Accounting and taxation review, 5(1), 45-59.
Panchal, S., & Chand, S. (2023). Impact of Capital Structure on Firm Performance: Empirical Evidence from Indian Manufacturing Sector. Global Business Review, 09721509231213235.
Park, H., Lee, J., & Shin, J. (2024). How Does Taxation Affect Corporate Social Responsibility? Evidence from a Korean Tax Reform. Journal of Business Ethics, 192(4), 745-774. https://doi.org/10.1007/s10551-023-05536-4
Rasheed, L. O., & Lateef, F. K. (2023). Corporate Taxes and Financial Performance of Listed Information and Communication Technology Companies in Nigeria.
Ronoowah, R. K., & Seetanah, B. (2024). Capital structure and the firm performance nexus: The moderating and mediating roles of agency cost. Managerial Finance, 50(9), 1598-1621.
Ryzhov, E. V. (2020). Telephone. The Gale Encyclopedia of Science, 8, 4399-4405.
Saidu, H. (2018). Corporate Tax and Financial Performance of Listed Nigerian Consumer Goods. Journal of Accounting and Financial Management ISSN, 4(4), 2018.
Saleem, F., Rafique, B., Mehmood, Q., Irfan, M., Saleem, R., Tariq, S., & Akram, G. (2013). The determination of capital structure of oil and gas firms listed on Karachi stock exchange in Pakistan. Interdisciplinary Journal of Contemporary Research Business, 4(9), 225-235.
Sarpong?Danquah, B., Adusei, M., & Frimpong, J. M. (2023). The capital structure–firm performance nexus: The role of judicial efficiency. Managerial and Decision Economics, 44(3), 1585-1600.
Thanjunpong, S., & Awirothananon, T. (2019). The effect of tax planning on financial performance in the stock exchange of Thailand. International Journal of Trade, Economics and Finance, 10(1), 25-29.
Wong, C. Y., Chandran, V. G. R., & Ng, B. K. (2016). Technology diffusion in the telecommunications services industry of Malaysia. Information Technology for Development, 22(4), 562-583.
Xu, G. (2021). Reassessing the literature on the relationship between financial structure and economic growth. Review of Economics, 72(2), 149-182.
Saleem, F. (2024). Tax Efficiency and Capital Structure Dynamics: Unveiling the Drivers of Financial Performance in Malaysia’s Telecom Sector. International Journal of Academic Research in Accounting, Finance and Management Sciences, 14(4), 234–244.
Copyright: © 2024 The Author(s)
Published by HRMARS (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode