The Impact of Internationalization on Zero Leverage: Evidence from the UK

Abstract

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. JEL classification: G32

Should Leverage Models Employ Time Varying or Time Invariant Firm Factors? An Empirical Analysis of Indian Listed Firms

“…Following previous research studies (Agyei-Boapeah, 2015; Fama & French, 2002; Flannery & Rangan, 2006), the present study uses market leverage as an estimate of capital structure, as the importance of book value measures tend to be downplayed in the theory (Chatzivgeri et al, 2015). In addition, market values are forward looking and represent the intrinsic value.…”