Signaling theory predicts that the stock price reaction to issuance of fixed-rate, non-investment-grade debt would be more unfavorable in an age when interest rate swaps are readily available than in the pre-swap age. This prediction is based on the fact that swaps can be used to hedge long-term...

Small firms have, on average, lower return on assets and higher leverage than do large firms. Small firms tend to do well in good economic conditions but to perform poorly in the worst economic conditions. We investigate the hypothesis that the small firm effect is manifest in the expansion...