The Influence of Potential Credit Rating Changes on Capital Structure
Stuart School of Business research presentation by: Stuart Adjunct Faculty Joseph Cursio
The Influence of Potential Credit Rating Changes on Capital Structure
- Stuart Adjunct Faculty Joseph Cursio
Abstract:
The Credit Rating-Capital Structure Hypothesis (Kisgen 2006 JoF) is half-correct: Firms will adjust their capital structure to avoid a potential credit rating downgrade, but not to achieve a potential credit rating upgrade. Speculative grade firms will issue adjust their capital structure than investment grade firms, financials and utilities adjust less than industrial firms, firms near the investment grade/speculative grade boundary will adjust more, and the level of moderation is moderated by credit spreads. These have implications for the Shyram-Sunders and Myers (1999) Capital Structure theory tests.
All Illinois Tech faculty, students, and staff are invited to attend.
The Friday Research Presentations series showcases ongoing academic research projects conducted by Stuart School of Business faculty and students, as well as guest presentations by Illinois Tech colleagues, business professionals, and faculty from other leading business schools.
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