Firm characteristics and effective tax rate as determinants of capital structure: Empirical evidence from selected Philippine publicly-listed companies

Date of Publication


Document Type

Bachelor's Thesis

Degree Name

Bachelor of Science in Accountancy

Subject Categories



Ramon V. Del Rosario College of Business



Thesis Adviser

Roberto B. Raymundo

Noel Christian Moratilla

James R. Cabuay

Gabrielle Louise C. Tan

Defense Panel Member

Alger C. Tang
Aeson Luis C. Dela Cruz
Alloysius Joshua S. Paril
Arnel Onesimo O. Uy


Firm characteristics and corporate tax rates have always been an important factor for firms in choosing their capital structure. Along this line, previous studies have noted significant relationships between the total debt to assets ratio of firms and size, profitability, liquidity, tangible assets, non-debt tax shields, volatility, and corporate tax rates. Results from regressions on a unique dataset of 102 non-financial publicly-listed companies in the Philippine Stock Exchange (PSE) for the years 2006, 2007, 2010, and 2011 show that in a general model including all non-financial firms in the sample, capital structure does not have a significant relationship with firm specific variables and effective tax rates. However, from a per sector analysis, there is empirical evidence indicating that the holding sector does take into account the effective tax rate and other variables whenever it chooses its level of debt financing. Notably, profitability and liquidity are significant in majority of the sectors, and are recognized as the factors, that firms take into account whenever they raise external financing. It is also evident that determinants of capital structure differ across the industries. Therefore, in the Philippine case, different industries consider unique factors whenever they are faced with capital structure decisions and policy changes on tax rates have a significant effect on the capital structure of firms in the holding sector, but may not have an impact on others.

Abstract Format






Accession Number


Shelf Location

Archives, The Learning Commons, 12F, Henry Sy Sr. Hall

Physical Description

viii, 108 leaves : illustrations (some color) ; 28 cm. + 1 computer disc ; 4 3/4 in.


Corporations--Philippines--Finance; Capital levy-- Philippines

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