This paper tests for changes in firms' production and pricing decisions in four industries in which firms have sharply increased their financial leverage. The analysis of product price and quantity data shows that industry product market decisions are associated with capital structure. In three industries, output is negatively associated with the average industry debt ratio. In the one industry which shows a positive association between output and debt ratios, rival firms have low financial leverage and entry barriers are relatively low. Analysis of executive compensation data supports the hypothesis that managers' incentives to maximize shareholders' wealth increase following recapitalization.

We examine how consumer credit affects entrepreneurship by linking three million earnings and pass-through tax records to credit reports. In the cross-section, we show that self-employment without employees and employer firm ownership increase monotonically with credit limits and credit scores. We then isolate individuals who have had discrete increases in credit limits after the exogenous removal of bankruptcy flags to measure the effects of personal credit on entrepreneurship. Following bankruptcy flag removal, individuals are more likely to start a new employer business and borrow extensively. Those who own businesses with employees borrow $40,000 more after bankruptcy flag removal, a 33% gain relative to the sample average.

We examine the impact of lost intellectual property protection on innovation, competition, firm performance, and valuation. We consider firms whose ability to protect intellectual property (IP) using patents is weakened following a major Supreme Court decision. We use large language models (LLM) to identify firms’ patent portfolios’ exposure to this decision and find an unequal impact. Large firms gain and small firms lose. Large impacted firms benefit as their sales growth increases and their exposure to lawsuits decreases. Small impacted firms lose as they face increased competition, product-market encroachment, and lower profits and valuations. They increase R&D and nondisclosure agreements.

We examine how firms redraw their boundaries after acquisitions using plant-level data. We find that there is extensive restructuring in a short period following mergers and full-firm acquisitions. Acquirers of full firms sell 27% and close 19% of the plants of target firms within three years of the acquisition. Acquirers with skill in running their peripheral divisions tend to retain more acquired plants. Retained plants increase in productivity whereas sold plants do not. These results suggest that acquirers restructure targets in ways that exploit their comparative advantage.