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Credit Rating and Capital Structure: Evidence from Latin America

Author

Listed:
  • Dany Rogers

    (UNIVERSIDADE FEDERAL DE UBERLÂNDIA)

  • Wesley Mendes-da-Silva

    (FUNDAÇÃO GETULIO VARGAS)

  • Henrique Dantas Neder
  • Pablo Rogers Silva

Abstract

This paper aims to analyze the impact of reclassifications trends in credit rating decisions in capital structure of listed non-financial companies in Latin America. To verify both the existence of this association were employed data belonging to all non-financial companies listed in Latin America, possessing ratings issued by the three major international ratings agencies international (i.e. Standard & Poor's, Moody's and Fitch) in January, 2010. When considering data for the period 2001-2010, through analysis of panel data, the main results suggest that the reclassifications of ratings seem have no informational content to the capital structure decisions of firms. However, some results indicate that companies classified in the worst levels of risk, and which are on the verge of the rating reclassifications, tend to use more debt than other companies, suggesting the existence of market timing.

Suggested Citation

  • Dany Rogers & Wesley Mendes-da-Silva & Henrique Dantas Neder & Pablo Rogers Silva, 2013. "Credit Rating and Capital Structure: Evidence from Latin America," Brazilian Review of Finance, Brazilian Society of Finance, vol. 11(3), pages 311-341.
    • Handle: RePEc:brf:journl:v:11:y:2013:i:3:p:311-341
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    Cited by:

    1. Valcacer, Santiago & José de Moura, Heber & Lopes , David & Amorim , Vinicius, 2017. "Capital structure management differences in Latin American and US firms after 2008 crisis," Journal of Economics, Finance and Administrative Science, Universidad ESAN, vol. 22(42), pages 51-74.

    More about this item

    Keywords

    Credit Rating; Capital Structure; Generalized Method of Moments;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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