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JEL Classification System

G32, G3, G34

Abstract

In this study, I revisit the determinants of corporate capital structures of publicly listed businesses in the Philippines, emphasizing major characteristics previously identified in academic literature, including tangibility, profitability, company size, non-debt tax shields, and growth. I investigate how companies’ financial actions correspond with or deviate from traditional capital structure theories within the context of the Philippine economy’s reliance on short-term, high-cost lending and its evolving capital market. Using a descriptive-exploratory approach to analyze 210 observations from 21 businesses listed on the Philippine Stock Exchange from 2014 to 2023, I performed a quantitative analysis of construct relationship using cross-sectional generalized least squares for static relationships and Arellano-Bond dynamic panel estimation for time-lagged effects. The data indicate a multifaceted impact of factors, including profitability and asset growth, which demonstrate a preference for domestic financing, thus corroborating the pecking order theory. Tangibility and company size demonstrate inconsistent compliance with the trade-off theory. These findings augment the literature on corporate capital structure by highlighting emerging economies such as the Philippines and provide strategic insights for managerial decision-making. Additionally, I support quantitative findings with a qualitative examination of the monetary policies of the Central Bank of the Philippines for strategic management implications.

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