Wall Street and the Pentagon: U.S. Defense Industry's Access to Capital Markets, 1990-2010

Abstract

Defense firms rely in part on cash raised from capital markets to finance ongoing operations as well as new investments in long-term assets, independent research and development, and retirement of maturing debt. The ability to access capital markets shapes the depth and breadth of the U.S. defense industry, the capabilities it can offer, and the cost of these capabilities to the Department of Defense. Given the monolithic nature of the defense market, it is paramount that decisionmakers understand the relationship between defense spending and the financial metrics that drive access to and cost of capital for defense firms.