NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Mark T. Leary

Olin Business School
Washington University in St. Louis
Campus Box 1133, One Brookings Drive
St. Louis, MO 63130
Tel: 314/935-6394

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NBER Program Affiliations: CF
NBER Affiliation: Research Associate

NBER Working Papers and Publications

September 2017The Evolution of Corporate Cash
with John R. Graham: w23767
We put the recent increase in corporate cash in historic perspective by studying nearly 100 years of average and aggregate cash holdings. Corporate cash more than doubled in the first 25 years of our sample before returning to 1920 levels by 1970. Since then, average and aggregate patterns diverge. To understand these patterns, we examine both time-series and cross-sectional variation in cash policies and draw several conclusions. First, the increase in average cash ratios since 1980 is driven entirely by a shift in the cash policies of new entrants, while within-firm changes have been negative or flat since WW II. Second, the cross-sectional relations documented on modern data are remarkably stable back to the 1920s. Third, despite the stability of these relations, firm characteristics ex...
October 2014How Does Government Borrowing Affect Corporate Financing and Investment?
with John Graham, Michael R. Roberts: w20581
Using a novel dataset of accounting and market information that spans most publicly traded nonfinancial firms over the last century, we show that U.S. federal government debt issuance significantly affects corporate financial policies and balance sheets through its impact on investors' portfolio allocations and the relative pricing of different assets. Government debt is strongly negatively correlated with corporate debt and investment, but strongly positively correlated with corporate liquidity. These relations are more pronounced in larger, less risky firms whose debt is a closer substitute for Treasuries. Indeed, we find a strong negative relation between the BAA-AAA yield spread and government debt, highlighting the greater sensitivity of more highly rated credit to variation in the su...
February 2014A Century of Capital Structure: The Leveraging of Corporate America
with John Graham, Michael R. Roberts: w19910
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 per...

Published: 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

April 2013A Century of Capital Structure: The Leveraging of Corporate America
with John R. Graham, Michael R. Roberts
in New Perspectives on Corporate Capital Structure, Viral V. Acharya, Heitor Almeida, and Malcolm Baker, organizers
 
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