Proximity to broad bond rating change and managerial ability

Akhilesh Bajaj (), Wray Bradley () and Li Sun ()
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Akhilesh Bajaj: The University of Tulsa
Wray Bradley: The University of Tulsa
Li Sun: The University of Tulsa

International Journal of Disclosure and Governance, 2022, vol. 19, issue 4, No 5, 430-443

Abstract: 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.

Keywords: Bond ratings; Proximity to broad rating change; Managerial ability (search for similar items in EconPapers)
JEL-codes: G30 M10 M39 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1057/s41310-022-00148-2

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