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Proximity to broad bond rating change and managerial ability

Author

Listed:
  • Akhilesh Bajaj

    (The University of Tulsa)

  • Wray Bradley

    (The University of Tulsa)

  • Li Sun

    (The University of Tulsa)

Abstract

We examine the level of managerial ability of firms with a plus or minus specification in their bond credit ratings (i.e., firms at a proximity to broad bond rating change) because prior research suggests that these borderline firms demonstrate different behavior, relative to firms that are not near a broad bond rating change. We posit and find that such firms increase their managerial ability in the subsequent period. Our results highlight the importance of having capable managers.

Suggested Citation

  • Akhilesh Bajaj & Wray Bradley & Li Sun, 2022. "Proximity to broad bond rating change and managerial ability," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 19(4), pages 430-443, December.
    • Handle: RePEc:pal:ijodag:v:19:y:2022:i:4:d:10.1057_s41310-022-00148-2
    DOI: 10.1057/s41310-022-00148-2
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    References listed on IDEAS

    as
    1. Samuel B. Bonsall IV & Eric R. Holzman & Brian P. Miller, 2017. "Managerial Ability and Credit Risk Assessment," Management Science, INFORMS, vol. 63(5), pages 1425-1449, May.
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    3. Kimberly J. Cornaggia & Gopal V. Krishnan & Changjiang Wang, 2017. "Managerial Ability and Credit Ratings," Contemporary Accounting Research, John Wiley & Sons, vol. 34(4), pages 2094-2122, December.
    4. Allison Koester & Terry Shevlin & Daniel Wangerin, 2017. "The Role of Managerial Ability in Corporate Tax Avoidance," Management Science, INFORMS, vol. 63(10), pages 3285-3310, October.
    5. Darren J. Kisgen, 2006. "Credit Ratings and Capital Structure," Journal of Finance, American Finance Association, vol. 61(3), pages 1035-1072, June.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Bond ratings; Proximity to broad rating change; Managerial ability;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General
    • M39 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Other

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