The Determinants of Zero Leverage: Evidence from Multinational Firms

Chatzivgeri, E., Sivaprasad, S. and Dontis-Charitos, P. 2015. The Determinants of Zero Leverage: Evidence from Multinational Firms. 5th International Conference of the Financial Engineering and Banking Society. Nantes, France 11 - 13 Jun 2015

TitleThe Determinants of Zero Leverage: Evidence from Multinational Firms
AuthorsChatzivgeri, E., Sivaprasad, S. and Dontis-Charitos, P.
TypeConference paper
Abstract

There is an ongoing debate in the capital structure literature as to the direction of the effects of internationalisation on firm debt. Despite the increasing attention on the role of internationalization in firms’ capital structure decisions, and the increasing adoption of zero leverage policies by multinationals, no study attempts to explain the effect of multi-nationality on the zero leverage decision. This study explores the relationship between the level of internationalization and zero leverage using a large panel of UK companies, while controlling for various company-related factors. We find strong evidence that multi-nationality affects the propensity of firms to have zero leverage and that this decision is affected by industry specificities.

KeywordsLeverage; Zero leverage; Capital structure; Multinational firms; Industry effects; Financial constraints;
Year2015
Conference5th International Conference of the Financial Engineering and Banking Society
Accepted author manuscript
Publication dates
Completed2015

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