Revisiting the Zero-Leverage Puzzle : R&D and Market Competition
Motivated by R&D’s features and its coexistence with the increasing trend of the zero-leverage puzzle over the past four decades, we find that, between 1980 and 2017, zero-leverage US listed firms are concentrated among R&D firms. Increases in R&D investment and increases in the sensitivity to R&D investment both contribute to the increase in the zero-leverage trend. We also find that high market competition increases the probability of becoming zero-levered for R&D firms, but not for non-R&D firms. Using US R&D tax incentive policies and import tariff policies as exogenous shocks and DID tests, respectively, we confirm that engaging in R&D and experiencing high market competition can cause firms to adopt a zero-leverage policy, thus offering an answer to the puzzle
Year of publication: |
[2023]
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Authors: | Chen, Minjia ; Li, Suyang ; Li, Xiafei ; Matousek, Roman |
Publisher: |
[S.l.] : SSRN |
Saved in:
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