U.S. Corporate Leverage: Developments in 1987 and 1988

Ben S. Bernanke,

Ben S. Bernanke Distinguished Senior Fellow - The Brookings Institution, Economic Studies @BenBernanke

John Y. Campbell, and

JYC

John Y. Campbell Harvard University

Toni M. Whited

TMW

Toni M. Whited

Discussants: Mark J. Warshawsky

MJW

Mark J. Warshawsky

THE YEARS 1987 and 1988 saw some dramatic developments in U.S. financial markets. The 1987 stock market crash was followed in 1988 by intense corporate restructuring activity, including a record volume of stock repurchases and leveraged buyouts. Meanwhile the use of debt financing by U.S. corporations continued to increase, even among firms not involved in ownership changes or major restructurings.