THE ANNOUNCEMENT EFFECTS OF PREFERRED STOCK RE-RATINGS

This paper examines the equity return behavior of firms whose preferred stock ratings have been changed by Standard and Poor's. The evidence indicates that the market anticipates the re-ratings by approximately 40 days for the complete sample. However, the downgrades for the utility subsample do not experience any downward drift before or after the re-rating. In general, these results support the previous findings of Pinches and Singleton (1978) and Weinstein (1977).