Projects per year
Abstract
Using an international dataset, we examine the role of issuers’ credit ratings in explaining corporate leverage and the speed with which firms adjust toward their optimal level of leverage. We find that, in countries with a more market-oriented financial system, the impact of credit ratings on firms’ capital structure is more significant and that firms with a poorer credit rating adjust more rapidly. Furthermore, our results show some striking differences in the speed of adjusting capital structure between firms rated as speculative and investment grade, with the former adjusting much more rapidly. As hypothesized, those differences are statistically significant only for firms based in a more market-oriented economy.
Original language | English |
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Pages (from-to) | 735-760 |
Number of pages | 26 |
Journal | European Journal of Finance |
Volume | 24 |
Issue number | 9 |
Early online date | 20 Jul 2017 |
DOIs | |
Publication status | Published - Jun 2018 |
Funding
Poon acknowledges a research grant (LU13501214) from the General Research Fund (GRF), Research Grants Council, Hong Kong. Shen and Poon acknowledge a research grant (UGC/FDS14/B20/16) from the Faculty Development Scheme (FDS) and Research Grants Council, Hong Kong.
Keywords
- capital structure
- credit ratings
- speed of adjustment
- Capital structure
Projects
- 1 Finished
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Are Market Implied Ratings Viable Alternatives to Credit Ratings? (市場隱含評級替代信用評級的可行性研究)
POON, P. H. W. (PI), HASAN, I. (CoI) & ZHANG, G. (CoI)
Research Grants Council (HKSAR)
1/01/15 → 31/12/17
Project: Grant Research