The main objective of this proposed research is to develop a new model in explaining the factors affecting firms' decision with respect to its capital structure. Although there is already abundant amount of literature on this topic, there are some limitations in which work to date can be improved. With regards to the existing literature, two issues have been identified for which improvements can be made: (1) the use of new sample and population -financially distressed firms classified as

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... compliant, and (2) the use of variable selection techniques in deciding the most optimal combination of predictors. The findings of this proposed research should be able to provide the answer to these two important questions: (1) what is the best combination of variables to be included in the final model? (2) how would the selected independent variable affect the firm capital structure decision? The answer to these questions is important as it will enable the management of a firms to design the appropriate capital structure policy and construct a package of financial instruments that need to be sold to investors. This proposed research expected to provide a better understanding of factors affecting capital structure and serve as a guide for future research, policy makers and the regulators in formulating the best policies, rules, and regulations to support the firms, especially financially distressed and shariah complaints firms with regards to their capital structure.