Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/228248
Authors: 
Dinlersoz, Emin Murat
Kalemli-Ozcan, Sebnem
Hyatt, Henry R.
Penciakova, Veronika
Year of Publication: 
2019
Series/Report no.: 
Working Paper No. 2019-18
Abstract: 
We study the leverage of U.S. firms over their life cycles and the connection between firm leverage, firm growth, and aggregate shocks. We construct a new dataset that combines private and public firms' balance sheets with firm-level data from U.S. Census Bureau's Longitudinal Business Database for the period 2005-12. Public and private firms exhibit different leverage dynamics over their life cycles. Firm age and size are systematically related to leverage for private firms but not for public firms. We show that private firms, but not public ones, deleveraged during the Great Recession and that this deleveraging is associated with a reduction in firm revenue and employment growth. Exploiting sectoral variation, we find that the leverage dynamics of firms is also relevant for aggregate fluctuations.
Subjects: 
leverage
firm dynamics
firm growth
firm life-cycle
financial constraints
borrowing limits
short-term debt
aggregate shocks
JEL: 
E23
G32
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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