This dissertation examines the effect of a change in credit rating on firm’s Leverage decisions. I find that firms tend to undertake strong capital market activities immediately after the 2008 financial crisis, by reducing their issuance of debt in the aftermath of a downgrade. I also find that firms with higher credit ratings have less debt and more equity when compared to firms that have lower credit ratings. Firms issue approximately less 3 percentage points of debt following a downgrade, whereas upgraded firms issue more debt, following the change in their credit rating.
| Date of Award | 3 May 2022 |
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| Original language | English |
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| Awarding Institution | - Universidade Católica Portuguesa
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| Supervisor | Mário Meira (Supervisor) |
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- Credit ratings
- Leverage
- Capital market activities
The effect of credit rating changes on firms’ leverage: US firms between 2009 and 2017
Benzarti, M. Y. (Student). 3 May 2022
Student thesis: Master's Thesis