Finance Papers

Document Type

Journal Article

Date of this Version

2004

Publication Source

The Journal of Business

Volume

77

Issue

4

Start Page

749

Last Page

796

DOI

10.1086/422438

Abstract

This paper studies firm-level leverage and performance measures before and after a currency crisis, using data from 17 countries. We show that, prior to a crisis, companies that expect to benefit from currency depreciations increase their leverage more than companies that are expected to be harmed by the depreciation. Profitability and financial fragility ratios display consistent patterns. We provide evidence that the Asian crisis is different from the previous European and Latin American ones: In Asia, all firms become more fragile after the crisis and their profitability declines and leverage increases further, whereas elsewhere there are clear signs of recovery after a crisis occurs.

Copyright/Permission Statement

© 2004 by The University of Chicago, available at http://www.jstor.org/stable/10.1086/422438.

Comments

At the time of publication, author Yrjo Koskinen was affiliated with Boston University School of Management and CEPR. Currently, he is a faculty member at the Wharton School at the University of Pennsylvania.

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Date Posted: 27 November 2017

This document has been peer reviewed.