Zero Leverage Phenomenon: Evidence from BRICS

The purpose of this study was to investigate the reasons for choosing the zero and ultra-low debt policy of BRICS companies, as well as the impact of these factors. To achieve this goal, the study reviewed classical and new research on this topic, formulated hypotheses for the selection of a policy of zero and ultra-low debt, and tested hypotheses using a sample of logistic models of regressions from a sample of 5738 companies BRICS. As a result, we came to the conclusion that: 1. The higher the financial constraints of a company, the higher the probability of choosing a debt-free policy, or an ultra-low debt policy. This is evidenced by the negative impact of the size of the company on the probability of choosing a debt-free policy and the positive effect of the Fixed Assets ratio on the probability of choosing a debt-free policy for all BRICS countries 2. The greater the financial flexibility of the company, the higher the probability of a policy of zero or ultra-low debt. This is evidenced by the positive effect of the Cash & CE ratio on the probability of choosing a debt-free policy. The effect of the Current Liabilities ratio turned out to be the inverse in the general case. 3. The influence of the company's short-lived tax shield on the probability of the company choosing a policy of zero or ultra-low debt is the reverse. This is evidenced by the opposite effect of the Non-Debt Tax Shield parameter on the probability of choosing a debt-free policy. Although during the research we planned to have a direct positive influence on the probability of the company choosing a policy of zero or ultra-low debt.