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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. JEL CLASSIFICATION G32

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Purpose From the network approach, the purpose of this paper is to provide empirical evidence about the role of international cooperative alliances (CAs) in the decision of small- and medium-sized enterprises (SMEs) to internationalize and remain in the external market. Design/methodology/approach To fulfill the proposed objective, qualitative research was carried out through analyzing two SMEs (case studies) in the Portuguese textile sector. Data collection was based on structured interviews, direct observation and some documental analysis. Findings The results show that the analyzed SMEs internationalized immediately after their creation, with this decision not being influenced by CAs but rather by the founder’s role and above all by a saturated domestic market. Practical implications Alliances are determinant in subsequent developments in the foreign market, allowing SMEs to reach new markets, increase their market share and consolidate their name in the international market. Thus, managers/entrepreneurs should adopt strategies that stimulate the firm’s expansion in the external market, prioritizing the formation of CAs with international partners. Originality/value This study suggests that none of the dominant models can exclusively explain the internationalization process of the studied SMEs. Therefore, this research has implications for the recent stream of literature that argues for a holistic view of internationalization models, considering the arguments of all models instead of only one.