This study empirically tests the plausibility of optimal capital structure within the context of the three major theories (trade-off, pecking order and agency costs) using the dynamic fixed effect dummy variable regression model. The analysis is conducted using a panel dataset obtained from 11 listed food and beverages companies covering the period from 2011 to 2020. The results show evidence that the three theories are all operational in the Nigerian food and beverages industry. Specifically, we find that debt-equity ratio responds significantly to changes in effective corporate tax rate, earnings to price ratio, asset utilization rate and firm size. Our results also indicate that debt-equity ratio is persistent meaning that it depends on its previous level. Hence, we conclude that optimal capital structure is a function of corporate income tax, degree of asymmetric information in the capital market and the tendency for corporate managers to pursue the interest of shareholders.