We examine the influence of credit rating changes on corporate excess cash holdings. We find that downgraded firms increase excess cash holdings by approximately 3% of total noncash assets, compared to a matched sample of firms without a rating change. We largely observe no significant cash...

We examine the firm's alterations in dividend and investment activities following credit rating changes. We find that downgraded firms reduce both dividends and investments more than no-rating-change firms. However, a silver lining of this doubly negative impact for shareholders is an increase...