Capital Structure and Company’s Sustainability: Case Study of Public Listed Oil and Gas Companies in Indonesia and Malaysia


  • Jubaedah Nawir Universitas Pembangunan Nasional Veteran Jakarta Jl. Rs.Fatmawati No.1 Pondok Labu Jakarta INDONESIA
  • Abdul Razak Abdul Hadi Universiti Kuala Lumpur 1016 Jalan Sultan Ismail, Kuala Lumpur MALAYSIA
  • Farah Deana Roslan Universiti Kuala Lumpur 1016 Jalan Sultan Ismail, Kuala Lumpur MALAYSIA


Capital Structure Theories; Oil and Gas Industry; Bursa Efek Indonesia, Bursa Malaysia; Generalized Method of Moments


This study is driven by the motivation to investigate the impact of liquidity position (as measured by cash balance) on the performance of oil and gas companies listed in Bursa Efek Indonesia as well as in Bursa Malaysia. We use the assumptions of Trade-off Theory to substantiate our empirical model. The oil and gas industry has remained robust in both countries despite the economic challenges in the energy sector from 2016 till 2021. This study has selected 10 and 30 companies whose revenues have been detrimentally affected by the recent oil price crisis from Bursa Efek and Bursa Malaysia respectively. Using secondary data from the two stock exchanges coupled with the deployment of Generalized Method of Moments (GMM) as an estimation tool, the study discovers that liquidity position is a significant predictor in determining the performance of oil and gas companies only in Malaysia. This is not the case for those in Bursa Efek and both lagged price as well as leverage (as measured by D/E ratio) are insignificant in both stock exchanges. The empirical findings in Bursa Efek are very much consistent with the Efficient Market Hypothesis in that the prevailing market price of a security truly reflects its future price.