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The oil industry's response to new avenues in futures trading

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  • Kenneth Hunsader
  • Ross Dickens

Abstract

We examine the Cumulative Abnormal Returns (CARs) of petroleum, airline and investment banking firms to the announcement and initiation of trading for two new oil-related assets in 2006: West Texas Intermediate crude futures contracts traded via the Intercontinental Exchange and the American Stock Exchange's (AMEX) US Oil exchange traded fund (USO). In general, we find few significant changes, but the changes we find are marginally positive reactions related to the two new contracts. We also find evidence that firms which utilize derivatives benefit less than firms which do not. However, firms which trade derivatives (nonhedgers) have greater returns than nontraders (hedgers).

Suggested Citation

  • Kenneth Hunsader & Ross Dickens, 2011. "The oil industry's response to new avenues in futures trading," Applied Financial Economics, Taylor & Francis Journals, vol. 21(6), pages 401-413.
    • Handle: RePEc:taf:apfiec:v:21:y:2011:i:6:p:401-413
    DOI: 10.1080/09603107.2010.532104
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    Cited by:

    1. Yaghoub Abdi & Xiaoni Li & Xavier Càmara-Turull, 2023. "Firm value in the airline industry: perspectives on the impact of sustainability and Covid-19," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-24, December.

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