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Preferred Stock Returns, CreditWatch, and Preferred Stock Rating Changes

Author

Listed:
  • Wansley, James W
  • Elayan, Fayez A
  • Maris, Brian A

Abstract

This paper examines the announcement effects of CreditWatch placement and reratings upon a sample of preferred stock issues that were placed on CreditWatch and later rerated or affirmed by Standard & Poor's. Results indicate that CreditWatch provides information to market participants and may have reduced the surprise associated with subsequent reratings. CreditWatch placement may be an erroneous signal, however, since nearly 50 percent of the issues placed for negative reasons were not downgraded, but affirmed, upon removal from CreditWatch. Copyright 1990 by MIT Press.

Suggested Citation

  • Wansley, James W & Elayan, Fayez A & Maris, Brian A, 1990. "Preferred Stock Returns, CreditWatch, and Preferred Stock Rating Changes," The Financial Review, Eastern Finance Association, vol. 25(2), pages 265-285, May.
    • Handle: RePEc:bla:finrev:v:25:y:1990:i:2:p:265-85
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    Cited by:

    1. María Concepción Verona Martel & José Juan Déniz Mayor, 2011. "Las agencias de rating y la crisis fi nanciera de 2008: ¿El fi n de un poder sin control?," Revista Criterio Libre, Universidad Libre - Sede Principal, June.
    2. Kamphol Panyagometh & Gordon S. Roberts, 2010. "Do Lead Banks Exploit Syndicate Participants? Evidence from Ex Post Risk," Financial Management, Financial Management Association International, vol. 39(1), pages 273-299, March.
    3. Jue Wang & Jiri Svec & Maurice Peat, 2014. "The Information Content of Ratings: An Analysis of Australian Credit Default Swap Spreads," Abacus, Accounting Foundation, University of Sydney, vol. 50(1), pages 56-75, March.
    4. Goh, Jeremy C. & Ederington, Louis H., 1999. "Cross-sectional variation in the stock market reaction to bond rating changes," The Quarterly Review of Economics and Finance, Elsevier, vol. 39(1), pages 101-112.
    5. Devrim Yaman, 2011. "Long-Run Operating Performance Of Preferred Stock Issuers," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 5(2), pages 61-73.

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