Credit Rating Change and Capital Structure in Latin America



Document title: Credit Rating Change and Capital Structure in Latin America
Journal: BAR - Brazilian Administration Review
Database:
System number: 000552937
ISSN: 1807-7692
Authors: 1
2
1
Institutions: 1Universidade Federal de Uberlandia, Uberlandia, Minas Gerais. Brasil
2Fundacao Getulio Vargas, Sao Paulo. Brasil
Year:
Volumen: 13
Number: 2
Country: Brasil
Language: Inglés
Document type: Artículo
English abstract This study analyzes the impact of imminent reclassification of credit rating on the decision-making regarding capital structure of non-financial corporations listed in Latin America. Despite the importance attributed by the market agents and the existence of empirical evidence of the effect caused by rating in the capital structure of companies in developed countries, this issue is still incipient in Latin-American countries. For this purpose, all the non-financial corporation owners of, at least one corporate rating issued by an international rating agency were taken into account, with the requirement of being listed on a stock exchange in at least one Latin-American country. Through a data panel analysis comprising the period between 2001 and 2010 and by making use of the Generalized Method of Moments (GMM), the main results that were achieved did not indicate that non-financial corporations listed in Latin America, with imminent reclassification of ratings, adopt less debts than those without an imminent reclassification of their ratings. These findings suggest that the imminent reclassifications of credit ratings do not present important information for managers of non-financial corporations in Latin America when making decisions about capital structure.
Disciplines: Economía
Keyword: Inversiones
Keyword: Credit rating,
Capital structure,
Credit scoring,
Panel data,
Investments
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