We find partial support for the Credit Rating-Capital Structure hypothesis: firms make a larger effort to avoid a potential credit rating downgrade; but not to achieve an upgrade. Credit ratings provide information to investors, and therefore changes in credit ratings affect markets. Financial...

This research examines the efficiency of nonparametric factor analytic approaches in measuring risk in common stocks of Korean financial firms from the risk-management perspective. This paper shows that using only one risk factor extracted from principal component analysis, the parallel shift or...