 Do Credit Ratings Determine Capital Structure?Amrit Judge and Anna Korzhenitskaya International Journal of the Economics of Business, 2022, vol. 29, issue 1, 89-118 Abstract: This paper examines whether the possession of a credit rating has an impact on firms leverage ratio. The issue of access to alternative sources of debt finance has received special attention in the wake of 2007–2009 financial crisis when banks significantly cut back on loans and firms became credit-constrained. Consequently, policy makers have been examining ways of facilitating access to non-bank finance. An overreliance on bank sourced debt finance when credit markets tighten has the potential to slow down the speed of economic recovery. This paper provides empirical evidence in support of the hypothesis that the possession of a credit rating is associated with higher leverage ratios. The effect for UK firms seems higher than that observed for similar US firms. This might be because there is greater financial transparency in the US implying lower levels of information asymmetry and so negating somewhat the effects of possessing a rating. Date: 2022 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:ijecbs:v:29:y:2022:i:1:p:89-118 Ordering information: This journal article can be ordered from DOI: 10.1080/13571516.2021.1961563 Access Statistics for this article International Journal of the Economics of Business is currently edited by Eleanor Morgan More articles in International Journal of the Economics of Business from Taylor & Francis Journals |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.