An empirical test of agency cost reduction using interest rate swaps

Joel T. Harper, John R. Wingender

Research output: Contribution to journalArticle

6 Citations (Scopus)

Abstract

This paper tests a model based on Wall's (Wall, L., 1989. Journal of Banking and Finance 13, 261-270) hypothesis of agency cost reduction using interest rate swaps. We find a significant positive relationship between the risk of the firm and the reduction of agency costs measured by the continuously compounded excess return (CAR) of the firm. Our findings are consistent with Wall's hypothesis and other theories of swap transactions and in explaining the existence and growth of the swap market.

Original languageEnglish
Pages (from-to)1419-1431
Number of pages13
JournalJournal of Banking and Finance
Volume24
Issue number9
StatePublished - Sep 2000

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Swaps
Interest rate swaps
Agency costs
Empirical test
Banking
Excess returns
Finance

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Finance

Cite this

An empirical test of agency cost reduction using interest rate swaps. / Harper, Joel T.; Wingender, John R.

In: Journal of Banking and Finance, Vol. 24, No. 9, 09.2000, p. 1419-1431.

Research output: Contribution to journalArticle

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