An empirical analysis of the determinants of capital structure: A test of the implications of some competing theories in the context of the Philippine capital market

Date of Publication


Document Type


Degree Name

Doctor of Business Administration

Subject Categories

Business Administration, Management, and Operations


Ramon V. Del Rosario College of Business


Management and Organization

Thesis Adviser

Rhoderick R. Santos

Defense Panel Chair

William J. Bradberry

Defense Panel Member

Angelo A. Unite
Ana Maria L. Tabunda
Victor B. Mariano


This study examines the significance of profitability, income volatility, investment or growth opportunities, tangibility of assets, financial slack, cash holdings, firm size, and market risk as explanatory variables for the variation in the observed capital structure or total indebtedness of a sample of firms. It tests the implications of the static tradeoff theory, pecking order theory, and agency costs theory of capital structure. Cross-sectional data and time series cross-sectional data gathered from the financial statements of twenty publicly traded firms for the period 1987 through 1996 and the Philippine Stock Exchange library are used to perform cross-sectional and time series cross-sectional analyses. The results of the study show that profitability, investment or growth opportunities, cash holdings, and firm size are significant explanatory variables of the variations in the observed capital structure. The results of the study also show that the regression coefficients of profitability and firm size are consistent with the static tradeoff theory the coefficients of investment opportunities and cash holdings are consistent with the pecking order theory the coefficient of the firm size is also consistent with the agency costs theory. In general, the models of capital structure and some of the variables that explain capital structure in the other countries, for example the United States, also explain capital structure decisions of large, publicly traded firms in the Philippines.

Abstract Format






Accession Number


Shelf Location

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

Physical Description

203 leaves ; 28 cm.


Determinants; Capital market; Efficient market theory; Time-series analysis

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