We examine whether they engage in income-increasing accruals manipulation (AM) or real activities earnings management (RM) to affect the future rating changes when firm managers have private information about the upcoming credit rating change. Using the large sample of U.S. data over the period...

Using US data over the period of 1988-2021, we find that firms with higher refinancing risk engage in more income-increasing accruals management, which indicates that the firms have opportunistic incentives to inflate earnings to appear financially attractive. We also document that the positive...