A Century of Capital Structure: The Leveraging of Corporate America

John Graham, Mark T. Leary and Michael Roberts ()

No 19910, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Unregulated U.S. corporations dramatically increased their debt usage over the past century. Aggregate leverage - low and stable before 1945 - more than tripled between 1945 and 1970 from 11% to 35%, eventually reaching 47% by the early 1990s. The median firm in 1946 had no debt, but by 1970 had a leverage ratio of 31%. This increase occurred in all unregulated industries and affected firms of all sizes. Changing firm characteristics are unable to account for this increase. Rather, changes in government borrowing, macroeconomic uncertainty, and financial sector development play a more prominent role. Despite this increase among unregulated firms, a combination of stable debt usage among regulated firms and a decrease in the fraction of aggregate assets held by regulated firms over this period resulted in a relatively stable economy-wide leverage ratio during the 20th century.

JEL-codes: E44 E62 G32 (search for similar items in EconPapers)
Date: 2014-02
New Economics Papers: this item is included in nep-his and nep-mac
Note: CF
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Citations: View citations in EconPapers (22)

Published as A Century of Capital Structure: The Leveraging of Corporate America , John R. Graham, Mark T. Leary, Michael R. Roberts. in New Perspectives on Corporate Capital Structure , Acharya, Almeida, and Baker. 2015
Published as John R. Graham & Mark T. Leary & Michael R. Roberts, 2015. "A century of capital structure: The leveraging of corporate America," Journal of Financial Economics, vol 118(3), pages 658-683.

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Chapter: A Century of Capital Structure: The Leveraging of Corporate America (2013)
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