The purpose of this paper is to test tradeoff and pecking order predictions about dividends and debt. Our discussion of the tradeoff and pecking order models largely focuses on predictions about how leverage and the dividend payout ratio vary with profitability, investment opportunity and volatility of earnings and cash flows. In addition to expand the samples, we use two empirical methods adopted by Newey and West(1987) and Fama and MacBeth(1973) separately. The empirical results approximately match to our hypothesis that according to the prediction of tradeoff and pecking order theory. We confirm the long-term predictive ability of both theories about dividends and debt in Taiwan business.