【正文】 stor and Veronesi 2021 , we find that firms with higher profitability and lower profit volatility have lower equity volatility. This suggests that panies with higher and more stable operating cash flows are less likely to go bankrupt, and therefore are potentially less risky. Among economic risk variables, the effects of firm size, profit volatility, and dividend policy on equity volatility stand out. Unlike some previous studies, our careful treatment of the endogeneity of financial policy confirms that leverage increases total firm risk. Otherwise, financial risk factors are not reliably related to total risk. Given the large literature on financial policy, it is no surprise that financial variables are,at least in part, determined by the economic risks firms take. However, some of the specific findings are unexpected. For example, in a simple model of capital structure, dividend payouts should increase financial leverage since they represent an outflow of cash from the firm ., increase debt . We find that dividends are associated with lower risk. This suggests that paying dividends is not as much a product of financial policy as a characteristic of a firm’s operations ., a mature pany with limited growth opportunities . We also estimate how sensitivities to different risk factors have changed over time. Our results indicate that most relations are fairly stable. One exception is firm age which prior to 1983 tends to be positively related to risk and has since been consistently negatively related to risk. This is related to findings by Brown and Kapadia 2021 that recent trends in idiosyncratic risk are related to stock listings by younger and riskier firms. Perhaps the most interesting result from our analysis is that our measures of implied financial leverage have declined over the last 30 years at the same time that measures of equity price risk such as idiosyncratic risk appear to have been increasing. In fact, measures of implied financial leverage from our structural model settle near ., no leverage by the end of our sample. There are several possible reasons for this. First, total debt ratios for nonfinancial firms have declined steadily over the last 30 years, so our measure of implied leverage should also decline. Second, firms have significantly increased cash holdings, so measures of debt debt minus cash and shortterm investments have also declined. Third, the position of publicly traded firms has changed with more risky especially technologyoriented firms being publicly listed. These firms tend to have less debt in their capital structure. Fourth, as mentioned above, firms can undertake a variety of financial risk management activities. To the extent that these activities have increased over the last few decades, firms will have bee less exposed to financial risk factors. We conduct some additional tests to provide a reality check of our results. First, we repeat our analysis with a reduced form model that imposes minimum structural rigidity on our estimation and find very similar results. This indicates that our results are unlikely to be driven by model misspecification. We also pare our results with trends in aggregate debt levels for all . nonfinancial firms and find evidence consistent with our conclusions. Finally, we look at characteristics of publicly traded nonfinancial firms that file for bankruptcy around the last three recessions and find evidence suggesting that these firms are increasingly being affected by economic distress as opposed to financial distress. In short, our results suggest that, as a practical matter, residual financial risk is now relatively unimportant for the typical . firm. This raises questions about the level of expected financial distress costs since the probability of financial distress is likely to be lower than monly thought for most panies. For example, our results suggest that estimates of the level of systematic risk in bond pricing may be biased if they do not take into account the trend in implied financial leverage ., Dichev, 1998 . Our results also bring into question the appropriateness of financial models used to estimate default probabilities, since financial policies that may be difficult to observe appear to significantly reduce risk. Lastly, our results imply that the fundamental risks born by shareholders are primarily related to underlying economic risks which should lead to a relatively efficient allocation of capital. Before proceeding we address a potential ment about our analysis. Some readers may be tempted to interpret our results as indicating that financial risk does not matter. This is not the proper interpretation. Instead, our results suggest that firms are able to manage financial risk so tha