This article provides empirical evidence on the zero-leverage phenomenon for a sample of European listed firms for the … period 1995-2016. It is shown that there are two types of firms with zero leverage: the financially constrained firms that … unconstrained firms that maintain zero leverage as a consequence of a financing decision, which supports the financial flexibility …

Purpose: This study verifies the debt covenant hypothesis by exploring the earnings management of zero-leverage firms … that are not constrained by debt covenants. Furthermore, this study investigates whether the earnings management of zero-leverage … firms varies depending on financial constraints, whether a consecutive zero-leverage period is associated with the level of …

The prevalence of zero-leverage firms is a puzzle in corporate finance. We analyze the acquisition behavior of zero-leverage … firms and offer a new venue to the studies on zero-leverage puzzle and the interdependence of capital structures and … investment decisions. The prior literature suggests three explanations regarding the zero-leverage puzzle: limited access to the …