WEALTH EFFECTS OF ASSET SECURITIZATION

This paper examines changes in wealth for firms that securitize assets . Findings are industry specific with wealth increase for finance comp anies, with no wealth change for industrial companies and automobile c ompanies, and with wealth loss for banks. Further examination, however , reveals that excess returns for banks are significantly related to f inancial slack in the quarter preceding the securitization announcemen t. Findings indicate that strong banks experience wealth gain while we ak banks experience wealth loss upon the announcement of asset securit ization.