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Internationalization and zero leverage

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  • Eleni Chatzivgeri
  • Panagiotis Dontis-Charitos
  • Sheeja Sivaprasad
  • Jonathan Williams

Abstract

Despite growing attention on the role of internationalization in capital structure and the increasing adoption of zero-leverage policies by multinationals (MNC), no study examines the effect of internationalization on zero leverage. Using data from the United Kingdom (UK), we present the first empirical evidence of a positive and significant relationship that increases in the level of internationalization both statistically and economically. We find that the motivation for zero leverage differs between MNC and domestic firms (DOM). Whilst the major driving factor for MNC is the maintenance of financial flexibility, financial constraints motivate DOM.

Suggested Citation

  • Eleni Chatzivgeri & Panagiotis Dontis-Charitos & Sheeja Sivaprasad & Jonathan Williams, 2024. "Internationalization and zero leverage," The European Journal of Finance, Taylor & Francis Journals, vol. 30(11), pages 1185-1211, July.
    • Handle: RePEc:taf:eurjfi:v:30:y:2024:i:11:p:1185-1211
    DOI: 10.1080/1351847X.2023.2277273
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