The zero-leverage phenomenon in European listed firms: A financing decision or an imposition of the financial market?
Autor(a) principal: | |
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Data de Publicação: | 2021 |
Outros Autores: | , |
Tipo de documento: | Artigo |
Idioma: | eng |
Título da fonte: | Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
Texto Completo: | http://hdl.handle.net/10400.6/11515 |
Resumo: | This article provides empirical evidence on the zero-leverage phenomenon for a sample of European listed firms for the period 1995–2016. It is shown that there are two types of firms with zero leverage: the financially constrained firms that face obstacles in obtaining external finance, as predicted by the financial constraints hypothesis; and the financially unconstrained firms that maintain zero leverage as a consequence of a financing decision, which supports the financial flexibility hypothesis. The zero-leverage phenomenon is also influenced by the financial system that prevails in each country, being boosted (inhibited) in market-based (bank-based) financial systems, and by the country’s macroeconomic conditions, with the recent financial and sovereign debt crises increasing the propensity for zero leverage in market-based countries. We also find that the financial flexibility hypothesis seems to be more important in market-based systems and that the financial constraints approach did not gain importance during the crisis period. Our results are robust to the use of alternative measures of debt conservatism, explanatory variables, and econometric methods and maintain their validity when we allow for endogeneity in firm size and dividend payments. |
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The zero-leverage phenomenon in European listed firms: A financing decision or an imposition of the financial market?Zero leverageFinancial constraintsFinancial flexibilityFinancial systemFinancial crisisThis article provides empirical evidence on the zero-leverage phenomenon for a sample of European listed firms for the period 1995–2016. It is shown that there are two types of firms with zero leverage: the financially constrained firms that face obstacles in obtaining external finance, as predicted by the financial constraints hypothesis; and the financially unconstrained firms that maintain zero leverage as a consequence of a financing decision, which supports the financial flexibility hypothesis. The zero-leverage phenomenon is also influenced by the financial system that prevails in each country, being boosted (inhibited) in market-based (bank-based) financial systems, and by the country’s macroeconomic conditions, with the recent financial and sovereign debt crises increasing the propensity for zero leverage in market-based countries. We also find that the financial flexibility hypothesis seems to be more important in market-based systems and that the financial constraints approach did not gain importance during the crisis period. Our results are robust to the use of alternative measures of debt conservatism, explanatory variables, and econometric methods and maintain their validity when we allow for endogeneity in firm size and dividend payments.uBibliorumMorais, FlávioSerrasqueiro, ZéliaRamalho, Joaquim2021-12-29T10:41:10Z20212021-01-01T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10400.6/11515engMorais, F., Serrasqueiro, Z., & Ramalho, J. J. (2021). The zero-leverage phenomenon in European listed firms: A financing decision or an imposition of the financial market? BRQ Business Research Quarterly, 234094442110246. https://doi.org/10.1177/23409444211024653https://doi.org/10.1177/23409444211024653info:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2023-12-15T09:54:02Zoai:ubibliorum.ubi.pt:10400.6/11515Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-20T00:51:17.375788Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse |
dc.title.none.fl_str_mv |
The zero-leverage phenomenon in European listed firms: A financing decision or an imposition of the financial market? |
title |
The zero-leverage phenomenon in European listed firms: A financing decision or an imposition of the financial market? |
spellingShingle |
The zero-leverage phenomenon in European listed firms: A financing decision or an imposition of the financial market? Morais, Flávio Zero leverage Financial constraints Financial flexibility Financial system Financial crisis |
title_short |
The zero-leverage phenomenon in European listed firms: A financing decision or an imposition of the financial market? |
title_full |
The zero-leverage phenomenon in European listed firms: A financing decision or an imposition of the financial market? |
title_fullStr |
The zero-leverage phenomenon in European listed firms: A financing decision or an imposition of the financial market? |
title_full_unstemmed |
The zero-leverage phenomenon in European listed firms: A financing decision or an imposition of the financial market? |
title_sort |
The zero-leverage phenomenon in European listed firms: A financing decision or an imposition of the financial market? |
author |
Morais, Flávio |
author_facet |
Morais, Flávio Serrasqueiro, Zélia Ramalho, Joaquim |
author_role |
author |
author2 |
Serrasqueiro, Zélia Ramalho, Joaquim |
author2_role |
author author |
dc.contributor.none.fl_str_mv |
uBibliorum |
dc.contributor.author.fl_str_mv |
Morais, Flávio Serrasqueiro, Zélia Ramalho, Joaquim |
dc.subject.por.fl_str_mv |
Zero leverage Financial constraints Financial flexibility Financial system Financial crisis |
topic |
Zero leverage Financial constraints Financial flexibility Financial system Financial crisis |
description |
This article provides empirical evidence on the zero-leverage phenomenon for a sample of European listed firms for the period 1995–2016. It is shown that there are two types of firms with zero leverage: the financially constrained firms that face obstacles in obtaining external finance, as predicted by the financial constraints hypothesis; and the financially unconstrained firms that maintain zero leverage as a consequence of a financing decision, which supports the financial flexibility hypothesis. The zero-leverage phenomenon is also influenced by the financial system that prevails in each country, being boosted (inhibited) in market-based (bank-based) financial systems, and by the country’s macroeconomic conditions, with the recent financial and sovereign debt crises increasing the propensity for zero leverage in market-based countries. We also find that the financial flexibility hypothesis seems to be more important in market-based systems and that the financial constraints approach did not gain importance during the crisis period. Our results are robust to the use of alternative measures of debt conservatism, explanatory variables, and econometric methods and maintain their validity when we allow for endogeneity in firm size and dividend payments. |
publishDate |
2021 |
dc.date.none.fl_str_mv |
2021-12-29T10:41:10Z 2021 2021-01-01T00:00:00Z |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article |
format |
article |
status_str |
publishedVersion |
dc.identifier.uri.fl_str_mv |
http://hdl.handle.net/10400.6/11515 |
url |
http://hdl.handle.net/10400.6/11515 |
dc.language.iso.fl_str_mv |
eng |
language |
eng |
dc.relation.none.fl_str_mv |
Morais, F., Serrasqueiro, Z., & Ramalho, J. J. (2021). The zero-leverage phenomenon in European listed firms: A financing decision or an imposition of the financial market? BRQ Business Research Quarterly, 234094442110246. https://doi.org/10.1177/23409444211024653 https://doi.org/10.1177/23409444211024653 |
dc.rights.driver.fl_str_mv |
info:eu-repo/semantics/openAccess |
eu_rights_str_mv |
openAccess |
dc.format.none.fl_str_mv |
application/pdf |
dc.source.none.fl_str_mv |
reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação instacron:RCAAP |
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Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
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RCAAP |
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RCAAP |
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Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
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Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
repository.name.fl_str_mv |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
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1799136402094424064 |