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논문검색

The impact of Credit rating on firm’s under-investment through Capital expenditure and M&A : Korean evidence

초록

영어

We find that as firm’s rating levels improve, managers tend to increase capial expenditure but this effect is reduced or changed negative within near BBB. These results do not depend on financial constraints, but rather because managers are concerned about a credit rating downgrade. Furthermore their underinvesetment affect the quality of their investment. In mergers and acquisitons case, the bidder at or near BBB grade have greater cumulative average returns. Therefore, we conclude that managers display different behavior depending on their current credit rating and that this can affect the quantity and quality of their investments.

목차

Abstract
1. Introduction
2. Related literature and hypothesis development
3. Empirical test methodology and sample data construction
3.1 Hypothesis test methodology
3.2 Sample data construction
3.3 Variables
3.4 Summary statistics
4. Results
4.1 Baseline result (H1)
4.2 Result of panel regression for H2.
4.3 Bidder’s CAR and Credit Rating
5. Conclusion
References

저자정보

  • Seonhyeon Kim Business School, Korea University, Republic of Korea
  • Chang-ki Kim Business School, Korea University, Republic of Korea

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