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Article Dans Une Revue Journal of Corporate Finance Année : 2018

The mitigating effect of bank financing on shareholder value and firm policies following rating downgrades

Mascia Bedendo
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Linus Siming
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Résumé

We document that shareholders of high-yield firms are less sensitive to credit rating downgrades the higher the proportion of bank financing in the firm. This positive effect is linked to firm behavior. In the year after the downgrade, high-yield firms with large bank debt ratios i) need to reduce their leverage less, and ii) display higher capital expenditures, compared to peers that rely relatively more on other sources of debt. Bank financing thus helps alleviate the adverse effects of rating downgrades on shareholders and firms in the high-yield segment. As such, one may view our findings as new evidence of the " specialness " and flexibility of bank debt.
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Dates et versions

hal-01636854 , version 1 (17-11-2017)

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Mascia Bedendo, Linus Siming. The mitigating effect of bank financing on shareholder value and firm policies following rating downgrades. Journal of Corporate Finance, 2018, 48, pp.94 - 108. ⟨10.1016/j.jcorpfin.2017.10.019⟩. ⟨hal-01636854⟩
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