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ABSTRACT
The study empirically examined the application of the trade-off theory of capital structure among quoted manufacturing firms in South Africa. The population for the study consisted of listed quoted manufacturing firms in South Africa Stock Exchange. The companies for the population had the responsibility to publish their financial statements for 12 consecutive years for the period of 2010- 2021. Secondary data used for the study was collected from a sample of 41 listed manufacturing firms while descriptive statistics, correlation matrix, and generalized linear model for the analysis of data. The regression results revealed that the speed adjustment of capital structure has a positive coefficient value of 1.00 but statistically significant at 1% with p-value < 0.05, and it implies that there is optimal capital structure exhibited by South Africa manufacturing firms, firm profitability has an insignificant effect on capital structure, asset tangibility has a significant effect on capital structure, liquidity has a significant effect on capital structure at 5%, growth opportunity has an insignificant effect on capital structure, firm size has a significant effect on capital structure at 1% level of significance and firm age has a significant effect on capital structure.
The study recommended that policy makers of manufacturing firms in South Africa should adopt the trade-off theory in their financial decision so that there should be optimal capital structure.
