Investigating the determinants of capital structure: Evidence from the Philippine property industry

• Main Authors: Cortez, Lorenzo Ruiz, Dy, Anna Katrina, Fernandez, Joyce Ann, Soliven, Anthony
• Format: text
• Language: English
• Published: Animo Repository 2011
• Subjects: Finance; Debt; Diversification in industry; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/18517
• Institution: De La Salle University

There are three major theories of capital structure under this study-- static trade-off theory, pecking order theory and agency cost framework. This study regress six common determinants of capital structure plus a diversification measure, seven factors in all, on leverage in order to determine which particular theory the property industry falls into. Empirical results show that the property industry of the Philippines falls under the static trade-off theory. This study also incorporates a diversification measure called caves index. Both of these extensions have not been extensively highlighted in other researchers and are considered as departures from the existing literature. Results show that all but earnings volatility were significant. Data utilized are from selected publicly listed property firms. Data is mainly sourced from the Osiris database dated 2005 to 2009 and the selected individual firm's annual report.