The Impact of Credit Rating Changes on Capital Structure Decisions: Evidence from Non-Listed Firms in Germany

2014 ◽  
Author(s):  
Wolfgang Drobetz ◽  
Sascha Heller
Keyword(s):  
Capital Structure ◽  
Credit Rating ◽  
Listed Firms ◽  
Rating Changes ◽  
The Impact

scholarly journals Impacts of credit rating changes on stock returns

2020 ◽  
Vol 2 (1) ◽  
Author(s):  
Pham Quynh Chau ◽  
Nguyen Thu Hien
Keyword(s):  
Market Efficiency ◽  
Stock Returns ◽  
Stock Prices ◽  
Credit Rating ◽  
Credit Ratings ◽  
Stock Exchanges ◽  
Listed Firms ◽  
Stock Market Efficiency ◽  
Rating Changes ◽  
The Impact

This paper studies the impact of credit ratings issued by CIC, a Vietnamese local rating agency, on stock returns of listed companies on the Vietnamese stock exchanges in the period of 2007-2010. The findings of the study confirm the assertions of the previous researches by Holthausen and Leftwich (1986), Hand, Holthausen and Leftwich (1992), Chan and Poor (2008). Specifically, CIC’s credit ratings slightly affect the stock prices of the listed firms, an evidence supporting CIC’s role and its rating quality to a certain extent. This paper also confirms semi-strong form of the Vietnamese stock market efficiency.

Role of Credit Rating in determining Capital structure: Evidence from Non-Financial sector of Pakistan

2020 ◽  
Vol 38 (3) ◽  
Author(s):  
Shoaib Ali ◽  
Imran Yousaf ◽  
Muhammad Naveed
Keyword(s):  
Capital Structure ◽  
Credit Rating ◽  
Least Square ◽  
Annual Data ◽  
Leverage Ratio ◽  
Financial Decisions ◽  
Financial Firms ◽  
High Level ◽  
The Impact ◽  
The Capital Structure

This paper aims to examine the impact of external credit ratings on the financial decisions of the firms in Pakistan.  This study uses the annual data of 70 non-financial firms for the period 2012-2018. It uses ordinary least square (OLS) to estimate the impact of credit rating on capital structure. The results show that rated firm has a high level of leverage. Moreover, Profitability and tanagability are also found to be a significantly negative determinant of the capital structure, whereas, size of the firm has a significant positive relationship with the capital structure of the firm.  Besides, there exists a non-linear relationship between the credit rating and the capital structure. The rated firms have higher leverage as compared to the non-rated firms. The high and low rated firms have a low level of leverage, while mid rated firms have a higher leverage ratio. The finding of the study have practical implications for the manager; they can have easier access to the financial market by just having a credit rating no matter high or low. Policymakers must stress upon the rating agencies to keep improving themselves as their rating severs as the measure to judge the creditworthiness of the firm by both the investors and management as well.

scholarly journals Determinants of Capital Structure within the Context of Corporate Governance in Egypt

2018 ◽  
Vol 13 (8) ◽  
pp. 26 ◽  
Author(s):  
Hanaa A. El-Habashy
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Emerging Economy ◽  
Managerial Ownership ◽  
Listed Firms ◽  
Western Countries ◽  
Specific Factors ◽  
The Impact ◽  
The Capital Structure

This study aims to investigate the characteristics of corporate governance that impact the capital structure decisions in listed firms in Egypt, to test the efficiency of the research results conducted in the developed Western countries in an emerging economy. A sample of 240 observations from the most active non-financial companies collected in the period 2009-2014 was used for hypothesis testing. Multiple regression models (OLS) were used for data analysis. Seven variables are used in measuring the attributes of corporate governance; they are the managerial ownership, institutional shareholding, shares owned by a large block, board size, board composition, separation of CEO/Chair positions and audit type. Four ratios were calculated for measuring the capital structure, they are long-term and short-term debt to assets, total debt to assets and debt to equity. The results suggest that corporate governance attributes have a significant impact on the capital structure decisions of listed Egyptian companies. In addition, firm-specific factors such as profitability, tangibility, growth opportunities, corporate tax, firm size and non-debt tax shields influence the choice of capital structure in Egypt. The results showed the same relationship with what was obtained in developed Western countries. The paper offers some contribution in the literature and helps to understand the impact of corporate governance on Egypt's capital structure as an emerging economy.

scholarly journals EFFECT OF CREDIT RATING ON CAPITAL STRUCTURE: A STUDY ON NON-FINANCIAL FIRMS IN PAKISTAN

2012 ◽  
Vol 12 (1) ◽  
Author(s):  
Keyword(s):  
Capital Structure ◽  
Credit Rating ◽  
Stock Exchange ◽  
Credit Ratings ◽  
Least Square ◽  
Statistical Tool ◽  
Ordinary Least Square ◽  
Optimal Capital Structure ◽  
Financial Firms ◽  
The Impact

Purpose- Aim of this study was to investigate whether the credit rating is an important determinant other than the firm's characteristic to obtain optimal capital structure focusing on the research hypothesis that the firms with higher credit along with the other factors (FTOA, ROA and Size) tend to have more debt in their capital structure of firms rated by P?CR? and Karachi Stock Exchange (KSE). Methodology/Sample- For this research, sample size of 48 observations (3 years data of 16 firms) was taken on the basis of convenience sampling. Results obtained by using Ordinary Least Square Model (OLS) as statistical tool to test the hypothesis Findings- Analysis clearly suggested that credit ratings do have an impact on firm's capital structure. It was concluded that firms with higher credit ratings along with other factors (FTOA, ROA and Size) do not tend to have more debt in their capital structure. Implications- Outcomes of this research might help investors, debtors and other stakeholders of the firms (rated by PACRA) to understand the impact of credit rating on firm's debt ratio and the overall dynamics and mechanism of capital structure.

The impact of large ownership on capital structure of Vietnamese listed firms

2019 ◽  
Vol 9 (1) ◽  
pp. 80
Author(s):  
An Thai ◽  
Tri M. Hoang
Keyword(s):  
Capital Structure ◽  
Listed Firms ◽  
The Impact

The impact of large ownership on capital structure of Vietnamese listed firms

2019 ◽  
Vol 9 (1) ◽  
pp. 80
Author(s):  
An Thai ◽  
Tri M. Hoang
Keyword(s):  
Capital Structure ◽  
Listed Firms ◽  
The Impact

scholarly journals Impact Of Firm Specific Factors On Capital Structure Decision: An Empirical Study Of Albanian Firms.

2013 ◽  
Vol 2 (4) ◽  
pp. 135 ◽  
Author(s):  
Anila Çekrezi
Keyword(s):  
Capital Structure ◽  
Return On Assets ◽  
Balance Sheets ◽  
Listed Firms ◽  
Natural Logarithm ◽  
Total Debt ◽  
Dependent Variables ◽  
Specific Factors ◽  
The Impact

This paper attempts to explore the impact of firm specific factors on capital structuredecision for a sample of 65 non- listed firms, which operate in Albania, over the period2008-2011.In this paper are used three capital structure measures ; short –term debt tototal assets (STDA), long- term debt to total assets (LTDA) and total debt to total assets(TDTA) as dependent variables and four dependent variables: tangibility(TANG),liquidity (LIQ), profitability(ROA=return on assets) and size (SIZE). The investigationuses panel data procedure and the data are taken from balance sheets and include onlyaccounting measures on the firm’s leverage. This study found that tangibility (the ratio offixed assets to total assets), liquidity (the ratio of current assets to current liabilities)profitability (the ratio of earnings after taxes to total assets) and size (natural logarithm oftotal assets) have a significant impact on leverage. Also empirical evidence reveals asignificant negative relation of ROA to leverage and a significant positive relation ofSIZE to leverage. And the second objective of this study is to identify the impact ofindustry classification on firm’s leverage, using a dummy variable for the trade sector. Soone of the hypothesis tested is if financial leverage is independent of industryclassification. Results reveal that long term debt to total assets and total debt to totalassets ratios are significantly different across Albanian industries.

scholarly journals Impact of Capital Structure on Profitability:An empirical analysis of listed firms in India

2018 ◽  
Vol 7 (2) ◽  
pp. 1-6
Author(s):  
Atif Ghayas ◽  
Javaid Akhter
Keyword(s):  
Capital Structure ◽  
Stock Exchange ◽  
Short Term ◽  
Return On Equity ◽  
Listed Firms ◽  
Relationship Capital ◽  
The Impact ◽  
The Relationship ◽  
Positive Effect

This study aims to empirically examine and analyze the impact of capital structure decision on the firm’s profitability by using a sample of 35 Indian pharmaceutical companies listed on Bombay Stock Exchange (BSE) during the period of 5 years from 2012 to 2016. Regression Analysis is used to measure the extent and nature of the relationship. Capital structure variables used in the study are ratio of long-term debt to total assets (LDA), ratio of short-term debt to total assets (SDA) and ratio of Total debt to total assets (DA) while profitability has been measure by Return on Equity (ROE). Firms Size (SIZE)and Salesgrowth(GROW) are also used as control variables. Results reveal a positive effect of SDA and DA on ROE, while a weak-to-no effect was found of LDA on ROE.

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