This paper investigates the financing behaviour of Dutch firms by testing whether a firm’s financing decisions are determined by certain factors identified in various theories. Since a firm’s financing decision is reflected in the changes of its leverage, our research focuses on the relationship between a firm’s debt ratio change and the changes in certain factors. The approach used in the paper is the structural equation modeling (SEM) technique. The model identifies various important factors that are related to Dutch firms’ financing decisions. The empirical results provide moderate support for the static trade-off theory, the pecking-order hypothesis, as well as the dynamic capital structure model. However, our data set is insuffi- cient to confirm the static trade-off theory, and our results provide little evidence to back the asymmetric information argument behind the pecking-order hypothesis.