Volume : II, Issue : VI, June - 2013

The Effect of Initial Bond Rating on Share Price Performance

Chandrashekar R, Dr. T. Mallikarjunappa

Abstract :

Credit rating enables investors to draw up the credit risk profile and to assess the adequacy of the risk premium offered by the market. Credit rating announced by the rating agencies significantly influence the share price of rated companies. Prior research has found that stock prices react negatively to the announcement of downgrades of bond ratings, while weaker positive excess bond and stock returns are found for upgrades. However, prior studies report mixed results on the information content of the bond ratings. Our study examines the reaction of stock returns to the initial bond rating. We find that the returns associated with these events are insignificant.

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Article: Download PDF   DOI : 10.36106/ijsr  

Cite This Article:

Chandrashekar R, Dr. T. Mallikarjunappan The Effect of Initial Bond Rating on Share Price Performance International Journal of Scientific Research, Vol : 2, Issue : 6 June 2013

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