Measuring the Financial Soundness of US Firms, 1926-2012

51 Pages Posted: 7 Oct 2018

See all articles by Andrew Atkeson

Andrew Atkeson

University of California, Los Angeles (UCLA) - Department of Economics; National Bureau of Economic Research (NBER)

Andrea L. Eisfeldt

UCLA Anderson School of Management

Pierre-Olivier Weill

University of California, Los Angeles; National Bureau of Economic Research (NBER)

Date Written: September 14, 2018

Abstract

We measure the distribution of firms’ financial soundness over most of the last century for a broad cross section of firms. We highlight three main findings for this key aggregate state variable. First, the three worst recessions between 1926 and 2012 coincided with sharp deteriorations in the financial soundness of all firms, but other recessions did not. Second, fluctuations in total asset volatility, rather than fluctuations in leverage, appear to drive most of the variation in the distribution of firms’ financial soundness. Finally, the distribution of financial soundness for large financial firms 1962–2007 largely resembles that for large nonfinancial firms.

Keywords: Distance to Default, Volatility, Leverage, Financial Crises

Suggested Citation

Atkeson, Andrew G. and Eisfeldt, Andrea L. and Weill, Pierre-Olivier, Measuring the Financial Soundness of US Firms, 1926-2012 (September 14, 2018). Research In Economics , Vol. 71, No. 1, 2017, Available at SSRN: https://ssrn.com/abstract=3249616

Andrew G. Atkeson

University of California, Los Angeles (UCLA) - Department of Economics ( email )

Box 951477
Los Angeles, CA 90095-1477
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Andrea L. Eisfeldt (Contact Author)

UCLA Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

HOME PAGE: http://https://sites.google.com/site/andrealeisfeldt/

Pierre-Olivier Weill

University of California, Los Angeles ( email )

Box 951477
Los Angeles, CA 90095-1477
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
60
Abstract Views
306
rank
440,114
PlumX Metrics