Date of Award


Degree Type

Doctoral Dissertation

Degree Name

Doctor of Business Administration (DBA)


Jack Welch College of Business

Dissertation Supervisor

Jing Jiang, Ph.D.

Committee Member

Shaokang Wang, Ph.D.

Committee Member

Michael Gorman, Ph.D.


The financial crisis of 2007-8 provides an opportunity to investigate which factors have a significant impact on firms at different stages of the crisis. This paper considers this shock event along these lines: impact of leverage on a firm can vary depending on timing of the crisis; firm are challenged to invest as the crisis recedes; revenue growth can enhance and sometimes impede returns; choosing to hold cash or not when a firm make the trade-off with investment and both the timing and decision are important; investors, managers and shareholders perceive these actions and events differently. Large cap US firms (as defined in the S&P 500) provide a stable sample to study these questions; this paper uses ROA and Tobin’s Q (Q) as performance measures and analyzes how they are impacted by debt, asset utilization, revenues and cashflow at different stages of the 2007-8 crisis. Using a cross-sectional regression analysis, the results show that firm performance (ROA), consistent with previous studies, is inversely related to leverage. However, coming out of the crisis, this reverses and leverage has a positive impact on valuation (Q) and is consistent with the Pecking order theory of capital structure where profitable companies (with strong cashflows) tend to finance investments from internal sources and therefore such companies tend to be associated with lower levels of leverage (Myers, 1984; Myers & Majluf, 1984). This paper also shows that while cashflow has a positive but declining impact on ROA over these time periods and has a similar positive impact on valuation (Q), however, the estimate’s sign changes to negative during the post-crisis suggesting that holding cash in an economic expansion doesn’t support higher valuation. By contrasting the impact of these variables on financial returns (ROA) and market valuation (Q) for large cap US firms during each of the three phases of the crisis, we see anomalies that would otherwise not be apparent, and, in this way, this study adds to the literature on corporate performance during a financial crisis.

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.



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