The wealth effect of swap usage in the food processing industry Academic Article uri icon

abstract

  • U.S. companies use interest rate swaps more than any other financial derivative. The effect of swap usage on the shareholders’ wealth is both controversial and unclear. Using a sample from the food processing industry, we examined both short-run and long-run wealth effects associated with swap usage. A significant long-run wealth effect of swap usage on swap users was not found. However, there was a significant negative wealth effect during a short period before firms first disclosed swap usage to the SEC. This finding is consistent with the argument that derivative usage may not be in the best interest of shareholders. © 2000 John Wiley & Sons, Inc.

author list (cited authors)

  • Yang, J., Leatham, D. J., & Case, S. A.

citation count

  • 0

publication date

  • January 2000

publisher