TY - JOUR AU - Graham, John AU - Leary, Mark T AU - Roberts, Michael R TI - A Century of Capital Structure: The Leveraging of Corporate America JF - National Bureau of Economic Research Working Paper Series VL - No. 19910 PY - 2014 Y2 - February 2014 DO - 10.3386/w19910 UR - http://www.nber.org/papers/w19910 L1 - http://www.nber.org/papers/w19910.pdf N1 - Author contact info: John Graham Duke University Fuqua School of Business 100 Fuqua Drive Durham, NC 27708-0120 Tel: 919/660-7857 Fax: 919/660-8038 E-Mail: john.graham@duke.edu 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 E-Mail: leary@wustl.edu Michael R. Roberts The Wharton School University of Pennsylvania 3620 Locust Walk, #2319 Philadelphia, PA 19104 Tel: 215/573-9780 Fax: 215/898-6200 E-Mail: mrrobert@wharton.upenn.edu M1 - published as John R. Graham, Mark T. Leary, Michael R. Roberts. "A Century of Capital Structure: The Leveraging of Corporate America," in Viral V. Acharya, Heitor Almeida, and Malcolm Baker, organizers, "New Perspectives on Corporate Capital Structure" Elsevier, Journal of Financial Economics 118(3) (2015) AB - 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. ER -