Open Access

Niklas Trüg

• The purpose of this thesis is to analyze capital structure dynamics in the U.S. in transitioning business cycle phases, by using a comprehensive sample of capital structure data from 1999 until 2018.The purpose of this thesis is to analyze capital structure dynamics in the U.S. in transitioning business cycle phases, by using a comprehensive sample of capital structure data from 1999 until 2018. A business cycle prediction model is provided to find the appropriate points in time in the sample to test whether firms in the U.S. take predicted shifts in the business cycle phase into consideration when making capital structure choices. For the full sample, it is found that firms keep up a higher level of leverage into the business cycle for too long. Also, it is found that firms do not strive to reduce leverage in anticipation of an economic downturn, in fact the opposite is found to be true. Furthermore, it is found, that leverage of cyclical sectors does show a more significant change in transitioning business cycle phases.…