This paper establishes that credit ratings affect the choice of payment method in mergers and acquisitions. We find that bidders holding a high rating level are more likely to use cash financing in a takeover. We attribute this finding to lower financial constraints and enhanced capability of...

There is a curvilinear relation between credit ratings and acquisitions. Non-investment grade firms make more acquisitions as their ratings improve, consistent with the relaxation of financial constraints. However, this pattern reverses for investment grade firms, supporting the view that such...

This study revisits the relation between corporate performance and corporate social responsibility (CSR) in the context of a major shift in firms' credit risk status. Relying on firms' credit rating as a performance indicator, we examine whether firms under the scrutiny of rating agencies...

This study explores the impact of firm-specific investor sentiment (FSIS) on stock returns around the announcement of credit rating changes. Consistent with a large body of work in social sciences, we find that FSIS is asymmetrically related to stock returns during rating changes and its impact...