rating agencies. We also document for the first time that firms responded to tax incentives to use debt during the Depression … era, but that the extra debt used in response to this tax-driven "debt bias" did not contribute significantly to the … 1928 to 1938. We find that firms with more debt and lower bond ratings in 1928 became financially distressed more …

investment, debt usage, and firm value. During the 1930-1938 Depression era, when the corporate sector was shocked by an …) and use more debt during the 1930s. We document similar effects for the number of outside directors on the board. Finally …