Corporate financing and anticipated credit rating changes |
| |
Authors: | Chi-Hsiou D Hung Anurag Banerjee Qingrui Meng |
| |
Institution: | 1.Adam Smith Business School,University of Glasgow,Glasgow,UK;2.Durham University Business School,Durham University,Durham,England, UK;3.Durham University,Durham,England, UK |
| |
Abstract: | Firm circumstances change but rating agencies may not make timely revisions to their ratings, thereby increasing information asymmetry between firms and the market. We examine whether firms time the securities market before a credit rating agency publicly reveals its decision to change a firm’s credit rating. Using quarterly data, we show that firms adjust their financing structures before credit rating downgrades are publicly revealed. Specifically, firms on average increase their debt financing by 1.29 % before the disclosure of a rating downgrade, and this increase is due to the issuance of debt rather than the repurchase of equity. In contrast, firms do not take significant financing actions before credit rating upgrades. |
| |
Keywords: | |
本文献已被 SpringerLink 等数据库收录! |
|