US Corporate Responses to the "Great Recession" (2007-2009): Evidence from the Entrails

The Great Recession of 2007-09 and US government response to prevent another great depression forced changes in businesses. We evaluate changes in the operations, investment and financing policies of the largest US firmsS&P500 companies, and identified differences in key operating and financing parameters after the crisis. LOGIT analysis of ratios classified pre and post crisis firms correctly confirming the firms differences in pre and post meltdown periods (gross margin, Tobin’s Q, capital intensity, total returns, and capital turnover ratio were significantly different). This suggests firms behaved as anticipated from corporate finance prescriptions i.e. overall US corporate response was rational.