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Article Dans Une Revue Finance Research Letters Année : 2021

Credit ratings and firm life-cycle

Magnus Blomkvist
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Hitesh Vyas
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Résumé

Credit ratings display an inverse U-shaped relation over the corporate life-cycle. Firms' likelihood to obtain a rating initially increases over the life-cycle as reputation increases and asymmetric information is reduced. As investment opportunities diminish during the shakeout and decline phases the benefit of having a rating decreases. The economic effect is substantial: transitioning from the introduction to the growth phase increases the rating likelihood from 6.7% to 30%.
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Dates et versions

hal-02887246 , version 1 (02-07-2020)

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Magnus Blomkvist, Anders Löflund, Hitesh Vyas. Credit ratings and firm life-cycle. Finance Research Letters, 2021, 36 (March), pp.101598. ⟨10.1016/j.frl.2020.101598⟩. ⟨hal-02887246⟩

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