The Power of Credit Ratings - A study of credit rating changes’ effects on essential firm aspects
Abstract: The aim of this study is to empirically examine how a change in credit rating affects three specific firm aspects: capital structure, valuation and performance. We want to extend the scope of previous research by examining whether US firms change their capital structure after a change in its Broad rating. We will also investigate whether a change in firms’ long-term ratings has an effect on firm valuation and performance.
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