FINANCIAL SUSTAINABILITY OF MATURE COMPANIES ACROSS SECTORS – EMPIRICAL EVIDENCE FROM BURSA MALAYSIA

Abstract

This empirical investigation is motivated by the need to assess how internal financing (IF), capital structure (CS), liquidity (LQ), and profitability (PRF) might influence the financial performance of mature listed firms on Bursa Malaysia (BM). In particular, it focuses on evaluating the financial sustainability of 12 well-established firms with dominant market positions across different sectors within the exchange. Methodologically, the study applies a static panel data regression framework to estimate the strength and direction of relationships between the selected explanatory variables and firm performance, with performance proxied by closing share price. The analysis is grounded within established capital structure theories. The dataset comprises annual observations covering a four-year period from 2022 to 2025. The findings derived from the Random Effects Model (REM) indicate that capital structure, represented by the debt-to-equity ratio, alongside internal financing (IF), measured through retained earnings (RE), emerge as statistically significant drivers of firm value among mature companies. These results suggest that achieving an optimal financing mix—particularly an optimal capital structure—plays a crucial role in strengthening financial resilience and supporting long-term sustainability. Furthermore, the results reveal a strong and statistically significant positive association between profit margin (PM) and share price (SP), indicating that higher profitability is consistently reflected in market valuation. Overall, the evidence suggests that both the Pecking Order Theory (POT) and the Trade-Off Theory (TOT) offer meaningful explanatory power in interpreting variations in the financial performance of mature firms listed on Bursa Malaysia.