This empirical study is undertaken to analyze the determinants of capital structure choice of Textile sector of Bangladesh. Further, this study also aims to examine which theory of capital structure rules the financing decision of Textile sector. In this study panel data was employed to estimate fixed-effect model which preserves the time series variation in leverage. The result of fixed-effect estimator reports that tangibility and profitability are statistically significant explanatory variables for Total Debt ratio. The study repots F statistics and found fixed-effect model as a whole to be statistically significant. This result is consistent with both trade-off model and agency cost theory of capital structure which suggests a positive relationship of profitability and tangibility to leverage.
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