How Manager Characteristic affects Capital Structure in Malaysian Manufacturing Sector: A Formative PLS-SEM Approach

Abstract

Access to capital is a critical factor in stimulating small business formation and growth. The failure of small business entities in securing the needed capital would entail them remaining small and limiting their ability. Thus, financial decisions by the management are crucial in ensuring that the firm's capital structure is optimal. This study focuses on manufacturing SME companies to examine the influence of manager characteristics (age, gender working experience, level of education) on capital structure towards technology improvement. Based on the survey of 219 respondents using the PLS-SEM approach, the results showed that only level of study and working experience were positively and significantly affecting capital structure preferences and caused technology improvement in the company. It is concluded that different managements have different leverage privileges with managers trying to attain optimal capital structure. This study would be of immense help to managers to make sound decisions regarding the composition of their capital structure.