This paper compares the performance of portfolios of debt free firms to comparable portfolios of leveraged firms. The results of the study indicate that investments in portfolios of debt free firms tend to generate higher returns than investments in their peer portfolios of leveraged firms over...

This study attempts to find out whether investors reward firms that carry no debt and penalize firms that carry large amount of debt during recessions. I compare the performance of portfolios of large cap debt free firms to comparable portfolios of leveraged firms during the last recession. The...