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The impact of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) on the value of S&L stocks

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Abstract

This study examines the effects of the Financial Reform, Recovery, and Enforcement Act of 1989 on the stock returns to shareholders of publicly traded savings and loans (S&Ls). Abnormal returns to stockholders are measured in response to each new piece of information concerning the passage of the Act. Using weekly data to have the largest possible sample, we found two significant time periods: a) the initial announcement of the Act and b) the time of passage and signing of the Act into law. We also provide evidence that stock return behavior differed between large and small S&Ls.

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Authors and Affiliations

  1. Department of Finance and International Business, Johns Hopkins University, 6740 Alexander Bell Drive, 21045, Columbia, MD

    Sarah K. Bryant

  2. Department of Finance, The George Washington University, 2023 G Street, NW, 20052, Washington, DC

    Spiros H. Martzoukos

Authors
  1. Sarah K. Bryant
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  2. Spiros H. Martzoukos
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Comments by the 1993 Eastern Finance Association conference participants are appreciated.

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Bryant, S.K., Martzoukos, S.H. The impact of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) on the value of S&L stocks. J Econ Finan 22, 67–76 (1998). https://doi.org/10.1007/BF02771477

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