The company's capital structure is influenced by a number of factors, and several studiesrnhave been conducted to examine the factors that can affect the capital structure ofrncompanies in various countries. However, no such study has been conducted in Ethiopia,rnwhere majority of construction companies have no clear financing pattern. Thus, thernfactors affecting their capital structure are not clear and therefore, this study wasrnconducted in order to fill this existing knowledge gap. In examining the determinants ofrncapital structure of those construction companies, quantitative research approach isrnused. A panel data collected form 11 randomly selected construction companies,rncovering the period from 2006 to 2010 was used. The findings from the panel randomrneffect estimation appear to support the pecking order theory of capital structure.rnSpecifically, the result reveals that the variables including growth opportunity,rntangibility, and non-debt tax shield positively affect the variations on the capital structurernof construction companies. Profitability of the companies, size, earning volatility,rnliquidity and age, on the other hand, inversely affect their capital structure. Furthermore,rnamong the whole independent variables, which are tested in this study, growthrnopportunity, tangibility of assets, liquidil1) and age of the company's are found asrnsignificant variables that explains the variations of the capital structure of constructionrncompanies.rnKey words: Determinants of Capital structure, Pecking Order theory,rnTrade of Theory, Ethiopian Construction Companies