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Financial adjustments and credit rating changes

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  • Kemper, Kristopher J.

Abstract

Credit ratings are examined from a firm's perspective in terms of the financial changes that are associated with changes in credit ratings. While previous papers in this field generally focus on market reactions, this study instead looks at firm reactions. After first taking a snapshot of the static financials associated with ratings changes, changes in financial positions associated with ratings changes are also studied. Further, this paper investigates financial changes in the year following a downgrade in an effort to learn more about the validity of firms making balance sheet adjustments in an effort to recover lost ratings.

Suggested Citation

  • Kemper, Kristopher J., 2020. "Financial adjustments and credit rating changes," Finance Research Letters, Elsevier, vol. 33(C).
    • Handle: RePEc:eee:finlet:v:33:y:2020:i:c:s1544612318302253
    DOI: 10.1016/j.frl.2019.06.011
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    References listed on IDEAS

    as
    1. Hand, John R M & Holthausen, Robert W & Leftwich, Richard W, 1992. "The Effect of Bond Rating Agency Announcements on Bond and Stock Prices," Journal of Finance, American Finance Association, vol. 47(2), pages 733-752, June.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Credit ratings; Capital structure;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • 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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