{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2026,3,21]],"date-time":"2026-03-21T20:51:27Z","timestamp":1774126287976,"version":"3.50.1"},"reference-count":37,"publisher":"Emerald","issue":"4","license":[{"start":{"date-parts":[[2016,11,14]],"date-time":"2016-11-14T00:00:00Z","timestamp":1479081600000},"content-version":"tdm","delay-in-days":0,"URL":"https:\/\/www.emerald.com\/insight\/site-policies"}],"content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":["RAF"],"published-print":{"date-parts":[[2016,11,14]]},"abstract":"<jats:sec>\n<jats:title content-type=\"abstract-subheading\">Purpose<\/jats:title>\n<jats:p>The purpose of this paper is to provide new insights into the low-leverage phenomenon by analyzing the dynamics of firms\u2019 financing policies. The authors explore three theoretical explanations of firms\u2019 motivations to switch among different levels of debt aversion: financial constraints, financial flexibility and financial distress.<\/jats:p>\n<\/jats:sec>\n<jats:sec>\n<jats:title content-type=\"abstract-subheading\">Design\/methodology\/approach<\/jats:title>\n<jats:p>The authors apply a multilevel mixed-effects model to a panel data sample of 9,005 US listed firms during 1987-2014. To use a multinomial ordered logit model, the authors break down the low-leverage firms into several levels of debt aversion.<\/jats:p>\n<\/jats:sec>\n<jats:sec>\n<jats:title content-type=\"abstract-subheading\">Findings<\/jats:title>\n<jats:p>The empirical analysis provides four main findings. First, there is a dynamic behavior regarding leverage policy: after five years, 39.4 per cent of initial zero debt firms remain all-equity firms, 14.2 per cent are leveraged firms and approximately 19.7 per cent still adopt a low-leverage policy. Second, greater asset volatility increases the expected likelihood that firms will be debt averse. Third, when firms grow bigger and older, they show a greater likelihood of moving toward a higher leverage level. Fourth, results derived from the investment variables of research and development, acquisitions, and capital expenditure provide strong evidence in favor of the financial flexibility hypothesis.<\/jats:p>\n<\/jats:sec>\n<jats:sec>\n<jats:title content-type=\"abstract-subheading\">Practical implications<\/jats:title>\n<jats:p>These findings suggest that conservative debt policy is integrated with corporate investment decisions.<\/jats:p>\n<\/jats:sec>\n<jats:sec>\n<jats:title content-type=\"abstract-subheading\">Originality\/value<\/jats:title>\n<jats:p>This paper contributes to extant literature by emphasizing the dynamic process associated with a low-leverage policy, unlike prior studies that focus on the determinants and characteristics of low-leverage firms. It also applies an econometric methodology that is new to the field: multilevel models.<\/jats:p>\n<\/jats:sec>","DOI":"10.1108\/raf-09-2015-0135","type":"journal-article","created":{"date-parts":[[2016,11,29]],"date-time":"2016-11-29T03:36:50Z","timestamp":1480390610000},"page":"463-483","source":"Crossref","is-referenced-by-count":9,"title":["Low-leverage policy dynamics: an empirical analysis"],"prefix":"10.1108","volume":"15","author":[{"given":"Joaquim","family":"Ferr\u00e3o","sequence":"first","affiliation":[]},{"given":"Jos\u00e9 Dias","family":"Curto","sequence":"additional","affiliation":[]},{"given":"Ana Paula","family":"Gama","sequence":"additional","affiliation":[]}],"member":"140","reference":[{"key":"key2020121104240041900_ref001","doi-asserted-by":"crossref","first-page":"515","DOI":"10.1016\/j.jfi.2007.04.001","article-title":"Is cash negative debt? 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