Graham, John R.; Hazarika, Sonali; Narasimhan, … - 2011
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 …
