S-Space College of Business Administration/Business School (경영대학/대학원) Dept. of Business Administration (경영학과) Theses (Master's Degree_경영학과)
The study of zero leverage firms in Korea
- 경영대학 경영학과
- Issue Date
- 서울대학교 대학원
- zero leverage
- 학위논문 (석사)-- 서울대학교 대학원 : 경영학과 재무금융전공, 2015. 8. 조성욱.
- Similar to international scope studies, zero leverage is a notable phenomenon in Korea. Zero leverage firms become increasingly more prevalent especially after the financial crisis. Consistent with the literature, zero leverage firms in Korea are small, less tangible, hold more cash, more profitable, and pay more tax. The empirical analysis support pecking order theory to the extent that the unlevered firms are more profitable and have more cash. In support of the trade off theory is the fact that unlevered firms are small and less tangible. Yet as for the discretionary spending, earnings volatility and Tobins q, the result is not robust enough to determine the implications. As for alternative explanations of zero leverage behavior, KOSDAQ firms are especially in support of the financing constraint
explanation to the extent that the zero leverage firms are smaller, less profitable, exhibit high Tobinss q and low tangibility. Further review of governance reveals that zero leverage firms in Korea are more likely to be
held by foreign investors, have higher governance index and are part of chaebol group.