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The Phenomenon of Zero-leverage in Developed and Emerging Markets
This study investigates the phenomenon of zero-leverage based on a sample of companies from 10 developed and 10 emerging countries in the period from 2011 to 2017. In the line of the study, we divided the companies into two groups: financial constraints and financial unconstrained and found that their decision to follow the zero-leverage policy is influenced by different factors. To sum up, the results show the impact of financial constraints is higher in the emerging market than in the developed one. Furthermore, financial constraints companies refuse the debt to improve their growth opportunities. Macroeconomic factors have a significant role in the choice of zero-leverage policy.