The long-run equity performance of zero-leverage firms

What is it about?

This paper aims to contribute to the existing finance literature on capital structure by examining the long-run equity performance of the firms that employ extremely conservative debt policy – zero leverage for three or five consecutive years.

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Why is it important?

This paper is the first article that thoroughly investigates the long-run stock returns of the firms that choose to stay debt free over an extended period of time. The benefit of the present article for investors and portfolio managers is the identification of an additional important determinant of stock returns.