Abstract
In this study we investigate the determinants of capital structure in 1,491 firms from 1998 to 2007, in a data set with 10,709 observations. We use dynamic panel data from ASEAN-4 which are regarded as emerging countries, namely, Indonesia, Malaysia, the Philippines and Thailand. Our results confirm that size has a significantly negative relationship with the leverage in Malaysia, the Philippines, Thailand and a significantly positive relationship in Indonesia. Profitability has a significantly negative relationship with the leverage in Indonesia and Malaysia and a significantly positive relationship in the Philippines. The most appropriate theory to explain size and profitability is the pecking order theory. Tangibility has significant relationship with the leverage which is positive in Malaysia and negative in the Philippines and does not lean on a specific theory. However, non-debt tax shields has no significant relationship in all countries and are considered as the less suitable factor in our study. We conclude that the size is the most important determinants of capital structure according to our result.