INTRODUCTION

Firm financing patterns have long been the object of study of the corporate finance literature. Financing patterns have traditionally been analyzed in the Modigliani–Miller framework, expanded to incorporate taxes and bankruptcy costs. More recently, asymmetric information issues have drawn attention to agency costs and their impact on firm financing choices. An important literature also exists relating financing patterns to firm performance and governance.

The financial structure of the corporate sector has proven relevant in other areas of economic research as well. Several recent studies have focused on identifying systematic cross–country differences in firm financing patterns. Those studies have identified the effects of such differences on financial sector development and economic growth. They have also examined the causes of different financing patterns, particularly the role of countries' legal and institutional environments. Finally, firm financing choices have emerged as an important factor in the literature on predicting and explaining financial instability.

Corporate sector risk characteristics, however, have not been much examined in the literature, aside from leverage and debt maturity considerations. Even these measures have been the object of few empirical investigations, mainly due to a paucity of data on corporate sectors around the world. Building on data that have recently become available, we fill this gap in the literature and shed light on the risk characteristics of corporate sectors around the world. We use data for 11,000 firms from 46 countries over the period 1995–1996, and we calculate 12 indicators typically used by financial analysts to gauge a firm's risk.