The zero-leverage phenomenon: A bivariate probit with partial observability approach

Morais, Flávio; Serrasqueiro, Zélia; Ramalho, Joaquim J.S.

doi:10.1016/j.ribaf.2020.101201

Cited by 19 publications

(35 citation statements)

References 61 publications

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“…It also comprises a relatively balanced number of firm-year observations between countries with market-and bank-based financial systems and covers the whole period of the most recent banking crises and sovereign debt crises in Europe, which, for some countries, according to Laeven andValencia (2018), went until 2012. This article contributes in several ways to the literature. Confirming previous evidence (Bessler et al, 2013;Morais et al, 2020), our results show that also at the European level there are two types of zero-leverage firms: financially constrained firms that are unable to get any funding; and financially unconstrained firms, which maintain zero leverage by choice. Also, similarly to Ghoul et al (2018), we confirm that the financial system prevailing in the country, as well as the level of stock market development, are important determinants of zero leverage, with firms in countries with market-based systems being more prone to be unlevered.…”

Section: Introductionsupporting

confidence: 89%

“…Also, similarly to Ghoul et al (2018), we confirm that the financial system prevailing in the country, as well as the level of stock market development, are important determinants of zero leverage, with firms in countries with market-based systems being more prone to be unlevered. In addition, we show that the recent finding by Morais et al (2020) that the European financial and sovereign debt crises increased the propensity for zero leverage, actually is only valid for market-based countries, since no significant changes occurred in bank-based countries. Another novel result uncovered by our study is the fact that the relevance of the financial flexibility hypothesis is higher in market-based systems and that, contrary to what could be expected, the financial constraints approach did not gain importance with the 2008 crisis.…”

Section: Introductionmentioning

confidence: 69%

“…A similar result is obtained by Ghose and Kabra (2016), and so the authors conclude that zero leverage is counter-cyclical as regards macroeconomic conditions. More recently, Morais et al (2020) showed that the 2008 financial crisis reduced the firms' propensity to resort to debt.…”

Section: External Determinants Of the Zero-leverage Phenomenon: The Financial System And The 2008 Global Financial Crisismentioning

confidence: 99%

“…For example, while Bessler et al (2013) and Ghoul et al (2018) present evidence of a direct impact of country legal and/or financial system on zero leverage, they assume that the effects of internal determinants are identical across countries. Similarly, the direct impact of the 2008 crisis on firm's and creditor's debt decisions was estimated by Morais et al (2020) assuming that the effects of internal determinants were the same during the crisis and non-crisis years. However, there are some connections between internal and external factors that may boost or attenuate their influence on zero leverage.…”

Section: Interactions Between Zero-leverage Internal and External Determinantsmentioning

confidence: 99%

See 3 more Smart Citations

The zero-leverage phenomenon in European listed firms: A financing decision or an imposition of the financial market?

Morais

Serrasqueiro

Ramalho

2021

BRQ Business Research Quarterly

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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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Section: Introductionsupporting

confidence: 89%

Section: Introductionmentioning

confidence: 69%

Section: External Determinants Of the Zero-leverage Phenomenon: The Financial System And The 2008 Global Financial Crisismentioning

confidence: 99%

Section: Interactions Between Zero-leverage Internal and External Determinantsmentioning

confidence: 99%

See 2 more Smart Citations

The zero-leverage phenomenon in European listed firms: A financing decision or an imposition of the financial market?

Morais

Serrasqueiro

Ramalho

2021

BRQ Business Research Quarterly

Self Cite

View full text Add to dashboard Cite

show abstract

“…First, because of the heteroscedastic nature of the microeconomic data in bivariate probit models [83], we controlled for heteroscedasticity via the inclusion of robust standard errors. Second, the in/exclusion and/or change of explanatory variables did not alter the outcomes significantly, indicating a robust model, see Morais et al [85], which included alternative country-specific variables as a robustness test. Third, the Variance Inflation Factor (VIF) tests for multicollinearity [86].…”

Section: Examining Relationshipsmentioning

confidence: 91%

What Makes Me Want You Here? Refugee Integration in a Zambian Settlement Setting

Gronau

Ruesink

2021

Sustainability

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Many of the world's refugees remain in Africa, where they stay long-term, mainly in neighboring countries. The present directions point to integration, in which the host society and the political surroundings play a key role. This paper aims to investigate the ways in which public opinion towards and contact with refugees support integration processes. We apply this research to a settlement setting in rural Zambia, a recent dataset of 275 households from 2018, and an econometric analysis. This is the first study dealing with a set of factors that affect the hosts’ opinion towards and contact with refugees in an African settlement context, and with respect to the Comprehensive Refugee Response Framework produced by the United Nations. Our results show, particularly, the religiosity, group membership, life satisfaction, food insecurity, agricultural ownership and natural resource uses of the host society to be the main factors that need policy consideration for the promotion of refugee integration. Stakeholders dealing in host–refugee settings and seeking for durable solutions should roll out community programs to address threat perceptions and interaction improvements.

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Local banking development and SME conservative financing policy. Does bank branch density matter?

Gama,

Sol Murta,

Vieira

2024

Small Bus Econ

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Does bank branch density matter for the conservative financing puzzle? This paper looks at the importance of nearby physical banking services to the decision to eschew debt among SMEs. Our multivariate logistic models rely on recent information from Portugal, a small open bank-based European economy, and control for firm-level and municipality-level effects. We show that banks' branch density at the municipality level increases the odds of local SMEs following a conservative financing policy. However, the weight of local cooperative bank branches relates negatively to the odds of not using debt. Several robustness checks concerning sampling procedures, estimation methods, and variables’ definitions corroborate our baseline results. Moreover, our results show that the effect of bank branches on the decision to eschew debt is economically more relevant for the long-term than the short-term debt.

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The zero-leverage phenomenon: A bivariate probit with partial observability approach

Cited by 19 publications

References 61 publications

The zero-leverage phenomenon in European listed firms: A financing decision or an imposition of the financial market?

The zero-leverage phenomenon in European listed firms: A financing decision or an imposition of the financial market?

What Makes Me Want You Here? Refugee Integration in a Zambian Settlement Setting

Local banking development and SME conservative financing policy. Does bank branch density matter?

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