Factors affecting capital structure of publicly listed construction companies in the Philippines before and after the economic boom of the construction industry

This study investigated the relationship of the capital structure to firms financial performance and characteristics of the listed construction companies in the Philippines. The study was designed to identify the factors affecting capital structure in terms of leverage for the period 1998-2016 and compared the difference on the factors affecting capital structure before and after the economic boom of construction industry in the Philippines from 1998-2003 and 2004-2016, respectively. This paper differs in the literature in several important aspects. First, the researcher dealt explicitly with the relationship between leverage and firms choice new financing. Lastly, the researcher includes the notion that the factors of capital structure may differ between phases of the business cycle. The variables used in this study are leverage and it was used as the dependent variable, whereas, profitability, growth, size and asset tangibility was used as independent variables. A dummy variable time was also employed to determine the factors affecting capital structure before and after the economic boom of construction industry. After considering the missing data on the financial information of the 37 listed construction companies as of 2017, only 25 firms were used as a samples. The results of the panel regression analysis indicated that size and tang had a positive relationship and significant impact to leverage for the period 1998-2016. Moreover, the size had a significant impact to leverage regardless during before and after boom of the construction industry. The capital structure choice in the Philippines is manifested by the trade-off theory because of the positive and significant relationship of size and tang to leverage ratio