Purpose: The purpose of this paper is to examine the information spillover of sovereign rating changes on the market valuation of bank stocks in Africa. Design methodology: First, the authors apply event study methodology to evaluate the stock market reaction of African bank stocks on the...

Purpose: The fundamental theory of Modigliani and Miller (1958) states that a firm's financing decisions are independent from the firm's value. Nevertheless, several empirical studies as well as theoretical approaches from the past decade impugn this relation for real markets with their...