Journal of the Korea Academia-Industrial cooperation Society (한국산학기술학회논문지)

The Korea Academia-Industrial cooperation Society (한국산학기술학회)
권호 표지
DOI QR코드

DOI QR Code

An Empirical Study of Two Different Groups of Zero Leverage Firms in Korea: Firms with Financial Constraints and Firms with Debt Avoidance for Future Investment

국내 무부채 기업의 두 종류 기업군에 관한 실증적 연구: 재정적 제약을 갖고 있는 그룹과 재무적 유연성을 추구하는 그룹

  • Yang, Insun (School of Business Administration, Hongik University)
  • Received : 2020.09.11
  • Accepted : 2020.11.06
  • Published : 2020.11.30
Download PDF
⟨ Previous Next ⟩

Abstract

This paper finds that Korean zero-leverage firms are not homogeneous. By conducting both univariate and multivariate logit regression analysis, this paper finds that Korean zero-leverage firms have zero leverage as either a consequence of financial constraints or because of a strategic decision to mitigate under-investment incentives and preserve financial flexibility. There are two distinct groups of unlevered firms with different levels of constraints as measured by their dividend policy, namely dividend payers and non-payers. Importantly, this paper finds new evidence that these two groups have different motives for selecting a zero leverage policy. Firms in the first group (non-payers) have zero leverage, mainly due to financial constraints. They rely heavily on their internal funds and consequently invest in fewer growth opportunities than their levered counterparts. Firms in the second group (payers) deliberately avoid debts and preserve financial flexibility to mitigate investment distortions, as predicted by the under-investment and financial flexibility hypotheses.

기존의 국내 무부채 기업에 관한 연구는 부채 그룹과 대비되는 의미에서의 무부채 단일 그룹의 동질적인 그룹 특성 연구에 중점을 두었다고 볼 수 있다. 본 연구는 국내 무부채 기업군을 단 변량 분석과 다 변량 로짓 회귀분석을 사용하여 배당금을 지급하는 그룹과 지급하지 않는 그룹으로 나누어 실증 분석한 결과 국내 기업들이 무부채 전략을 선택하는 동기에 있어서 크게 두 종류의 기업군으로 분류 될 수 있음을 발견했다. 첫 번째 기업군은 주로 기업 크기가 작은 신생 기업들로서 금융시장에서 부채를 조달하는데 어려움이 있고 이런 재정적인 어려움 때문에 무부채를 선택하는 기업들이다. 이런 종류의 기업들은 배당금을 지급할 수 있을만한 유동성이 없다. 두 번째 그룹은 비교적 크고 성숙한 기업들로서 현재 부채 조달에 어려움은 없지만 미래 성장에 필요한 투자 자금 확보를 대비해서 현재의 부채 사용을 억제하여 필요한 시점의 원활한 부채 자금 조달을 위한 재정적 유연성을 갖고자 무부채 전략을 선택하는 것으로 보인다. 재정적으로는 비교적 안정되어 있고 배당을 지급하지 않는 그룹보다 수익률과 영업 현금흐름에서 더 높지만 성장가능성은 상대적으로 더 낮다. 요약하자면 무부채 그룹은 단일 공통된 특성의 그룹이 아니다.

Keywords

References

  1. A. Strebulaev, B. Yang, "The Mystery of Zero-leverage Firms", Journal of Financial Economics Vol.109, pp.1-23, 2013. DOI: https://doi.org/10.1016/j.jfineco.2013.02.001J
  2. J. R. Graham, "How Big Are the Tax Benefits of Debt?", Journal of Finance Vol.55, No.5, pp.1901-1941, 2000. DOI: https://doi.org/10.1111/0022-1082.00277
  3. Binsbergen, J. Graham, J. Yang, "The Cost of Debt", Journal of Finance Vol.65, No.6, pp. 2089-2136, 2010. DOI: https://doi.org/10.1111/j.1540-6261.2010.01611
  4. B. C. Koh, J. W. Kim, "Low Volatility Anomaly and Its Profitability in Korean Stock Markets", Korean Financial Studies, Vol.43, No.3, pp.573-603, 2014.
  5. B. C. Koh, J. E. Lim. "A Study on the Characteristics of Korea's Non-Debt Enterprises, Korean Finance Association Conference, Vol.25, No.11, pp.27-52, 2015.
  6. A. Iona, L. Leonida, A. Ozkan, "Determinants of fi nancial conservatism: Evidence from low-leverage and cash-rich UK firms", Working Paper, University of York, 2007.
  7. B. A. Minton, K. H. Wruck, "Financial conservatism: Evidence on capital structure from low leverage firms", Working Paper, Ohio State University, 2001.
  8. M. Marchica, R. Mura, "Financial flexibility, investment ability and firm value: Evidence from firms with spare debt capacity", Financial Management, Vol.39, No.4, pp.1339-1365, 2010. DOI: https://doi.org/10.1111/j.1755-053X.2010.01115.x
  9. V. A. Dang, "An empirical analysis of zero-leverage firms: New evidence from the UK", International Review of Financial Analysis Vol.30, pp.189-202, 2013. DOI: https://doi.org/10.1016/j.irfa.2013.08.007
  10. E. Devos, U. Dhillon, M. Jagannathan, S. Krishnamurthy, "Why are firms unlevered?", Journal of Corporate Finance Vol. 18, pp.664-682, 2012. DOI: https://doi.org/10.3386/w6234
  11. H. S. Byeon, "Financial Distress and Debt Choice: Evidence from the Korean Financial Crisis", Korean Business Review, Vol.35, No.4, pp.1035-1073, 2006.
  12. S. H. Mo, "Debt Free Management Based on the Biblical Perspective and the Perspective of the Modern Finance Theory on Capital Structure", Logos Management, Vol.11, No. 4, pp.1-20, 2013.
  13. B. K. Kim "A Study on the Characteristics of Low-Leverage Firms", Korean Corporation Management Review, Vol.25, No.3, pp.137-157, 2018. https://doi.org/10.21052/KCMR.2018.25.3.07
  14. G. H. Jung, "An Empirical Study on the Financial Characteristics of Low Leverage Firms", Korean Journal of Business Administration, Vol.22, No.4, pp.1803-1824, 2009.
  15. J. E. Stiglitz, A. Weiss, "Credit Rationing in Markets with Imperfect Information", The American Economic Review, Vol.71, No.3 (pp. 393-410, 1981. DOI: https://doi.org/10.2307/180278
  16. C. J. Hadlock, J. R. Pierce, "New evidence on measuring financial constraints Moving beyond the KZ index", Review of Financial Studies, Vol.23, No.5, pp.1909-1940, 2010. DOI: https://doi.org/10.1093/rfs/hhq009
  17. H. DeAngelo, L. DeAngelo, "Capital structure, payout policy, and financial flexibility," Working Paper, University of Southern California, 2007. DOI: https://doi.org/10.2139/ssrn.916093
  18. S. C. Myers, N. S. Majluf, "Corporate financing and investments decisions when firms have information that investors do not have," Journal of Financial Economics, Vol.13, No.2, pp.187-221, 1984. DOI: https://doi.org/10.3386/w1396
  19. M. T. Leary, M. R. Roberts, "Do firms rebalance their capital structures. Journal of Finance", Vol.60, No.6, pp.2575-2619, 2005. DOI: https://doi.org/10.1111/j.1540-6261.2005.00811.x
  20. A. Gamba, A. J. Triantis, "The value of financial flexibility.," Journal of Finance, Vol.63, No.5, pp.2263-2296, 2008. DOI: https://doi.org/10.1111/j.1540-6261.2008.01397.x
  21. M. H. Miller, and K. Rock, "Dividend Policy under Asymmetric Information", Journal of Finance, Vol.40, pp.1031-1051, 1985. DOI: https://doi.org/10.1111/j.1540-6261.1985.tb02362.x
  22. A. Charitou, N. Lambertides, G. Theodoulou, "The Effect of Past Earnings and Dividend Patterns on the Information Content of Dividends When Earnings are Reduced", Abacus, Vol.46, No.2, pp.153-187, 2010. DOI: https://doi.org/10.1111/j.1467-6281.2010.00314.x
  23. D. J. Skinner, E. F. Soltes, "What Do Dividends Tell Us About Earnings Quality?", Review of Accounting Studies, Vol.16, No.1, pp. 1-28, 2011. DOI: https://doi.org/10.1007/s11142-009-9113-8
  24. S. C. Myers, "Determinants of corporate borrowing. Journal of Financial Economics,"Vol.5, No. 2, pp.145-175, 1977. DOI: https://doi.org/10.1016/0304-405X(77)90015-0
  25. J. Harford, "Corporate cash reserves and acquisition", Journal of Finance, Vol.54, No.6, 1969-1997, 1999. DOI: https://doi.org/10.1093/rfs/hhq009
  26. T. Opler, L. Pinlowitz, R. Stulz, R. Williamson, "The determinants and implications for corporate cash holdings," Journal of Financial Economics, Vol.52, No.1, pp.3-46, 1999. https://doi.org/10.1016/S0304-405X(99)00003-3