The Black Swan problem : The role of capital, liquidity and operating flexibility
How firms cope with tail risk is an under-researched problem in the literature on corporate risk management. This paper presents stylized facts on the nature of revenue shocks based on 65 years worth of Compustat data. We define a Black Swan as an unexpected year-on-year drop in revenue between 30%–90%. The rate of Black Swans has increased markedly since the 1970's and there are more pronounced c
