Zero-leverage Puzzle: Evidence from BRICS Countries

Student: Bdoyan Sergey

Educational Programme: Economics (Bachelor)

Year of Graduation: 2017

The research examines determinants of zero-leverage policy of BRICS countries’ firms. Using data over period 2005-2015, we demonstrate that firms avoid debt financing due to financial constraints, desire for preserving financial flexibility and adverse macroeconomics conditions. Nevertheless, the first is mainly related to dividend non-payers, while other hypotheses are more reasonable for companies, that pay dividends. In addition, we document confirmation of pecking order theory for unconstrained companies. Finally, the article is the first research that find positive impact of yield curve on zero-leverage decisions of emerging markets’ firms.

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