Details

Subject(s)

• Corporate debt [Browse]

Series

Policy research working papers. [More in this series]

Summary note

This paper explores the effect of oil price fluctuations on the stock returns of U.S. oil firms using an identification strategy through heteroskedasticity, exploiting the 2020 oil price crash. The results are twofold. First, a decline in oil prices significantly reduces oil firms' stock returns. On average, a 1 percent decline in oil prices leads to a 0.44 percent decline in stock prices. Second, firm debt appears irrelevant in mediating the effect of oil prices on oil firms' stock returns. Moreover, the muted role of debt was not likely caused by the liquidity backstop provided by the Federal Reserve.

Source of description

Description based on publisher supplied metadata and other sources.

Other title(s)

Corporate Debt and Stock Returns

Other standard number

• 10.1596/1813-9450-10079

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