The Impact of Internationalization on Zero Leverage: Evidence from the UK

33 Pages Posted: 14 Mar 2017

See all articles by Eleni Chatzivgeri

Eleni Chatzivgeri

Westminster Business School

Panagiotis Dontis-Charitos

Westminster Business School, University of Westminster

Sheeja Sivaprasad

University of Westminster - Westminster Business School

Date Written: Jan 31, 2016

Abstract

Despite the increasing attention on the role of internationalization in firms’ capital structure decisions, and the increasing adoption of zero leverage policies by multinationals, no study attempts to explain the effect of multi-nationality on the zero leverage decision. We explore the relationship between the level of internationalization and zero leverage using a large panel of UK companies, while controlling for various company-related factors. We find a positive relationship between multi-nationality and the propensity of firms to have zero leverage, which rises in magnitude with increases in the level of internationalization. We also provide evidence that the zero leverage decision is affected by industry specificities.

Keywords: Leverage; Zero leverage; Capital structure; Multinational firms; Industry effects

JEL Classification: G30; G32

Suggested Citation

Chatzivgeri, Eleni and Dontis-Charitos, Panagiotis and Sivaprasad, Sheeja, The Impact of Internationalization on Zero Leverage: Evidence from the UK (Jan 31, 2016). Available at SSRN: https://ssrn.com/abstract=2930941 or http://dx.doi.org/10.2139/ssrn.2930941

Eleni Chatzivgeri (Contact Author)

Westminster Business School ( email )

35 Marylebone Road
London NW1 5LS
United Kingdom

Panagiotis Dontis-Charitos

Westminster Business School, University of Westminster ( email )

35 Marylebone Road
London NW1 5LS
United Kingdom

Sheeja Sivaprasad

University of Westminster - Westminster Business School ( email )

35 Marylebone Road
London NW1 5LS, NW1 5LS
Great Britain
0207 911 5000 Ext3157 (Phone)

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