Financial Liberalization, Entrepreneurial risk and Equity risk premia

The book investigates the relationship between entrepreneurial distress and expected stock returns in the U.S., particularly after the banking deregulation of the 1980s. It posits that financial liberalization improved credit access for entrepreneurs, reducing their liquidation risks during downturns and stabilizing business cycle variations in risk. The analysis extends Hoffmann's earlier work to explore whether this distress factor can effectively price assets across different sectors, building on established economic theories.