Purpose: Good earnings quality (EQ) provides reasonable assurance as to the reliability of future cash-flow generation capability of the borrowing firms and thereby mitigates the credit risk of the banks. Against the backdrop of the stressed-assets problem in public-sector banks in India,...

Purpose: This paper aims to explore whether following an apparently sub-optimal “almost zero leverage (AZL)” policy by some Indian firms actually creates incremental value for their shareholders or is detrimental for them. Design/methodology/approach: The paper investigates the relative...