Capital Structure Decisions Following Credit Rating Changes: Evidence from Japan

Cited 0 time in webofscience Cited 0 time in scopus
  • Hit : 51
  • Download : 0
Our study adds to the body of knowledge about the relationship between credit ratings and the capital structure of bond issuers. Using Bloomberg and Datastream databases and employing panel regression models, we study the capital structure changes of Japanese enterprises after credit rating changes by global rating agencies (S&P and Moody's) as well as their local counterparts (R&I and JCR) from 1998 to 2016. We find that after rating downgrades, Japanese enterprises considerably reduce net debt or net debt relative to net equity, similar to the findings of Kisgen (2009), who focused on U.S. industrial firms. They do not, however, make adjustments to their financial structure as a result of rating improvements. In comparison to downgrades by S&P and Moody's, Japanese corporations issue 1.89 percent less net debt and 1.50 percent less net debt relative to net equity after R&I and JCR rating downgrades. To put it another way, Japanese companies consider rating adjustments made by local agencies to be more significant than those made by global rating organizations. Our findings contradict earlier research that suggests S&P and Moody's are more prominent in the investment community than R&I and JCR in Japan.
Publisher
KOREA DISTRIBUTION SCIENCE ASSOC
Issue Date
2022-04
Language
English
Article Type
Article
Citation

JOURNAL OF ASIAN FINANCE ECONOMICS AND BUSINESS, v.9, no.4, pp.1 - 12

ISSN
2288-4637
DOI
10.13106/jafeb.2022.vol9.no4.0001
URI
http://hdl.handle.net/10203/295866
Appears in Collection
MG-Journal Papers(저널논문)
Files in This Item
There are no files associated with this item.

qr_code

  • mendeley

    citeulike


rss_1.0 rss_2.0 atom_1.0