This paper examines the joint role of market feedback and investment constraints on managerial behavior. Using a sample of UK fixed price initial public offerings, we show that underperformance of share returns at the IPO significantly affects managerial investment decisions in the period after...

Very few studies to date have considered the market reaction to the announcement of credit watch procedures and the impact of credit watch procedures upon the market reaction to credit rating changes. This paper addresses this gap in the literature by focusing on credit watch procedures at the...

We investigate agency variation in credit quality assessment (Standard and Poor's vs. Moody's vs. Fitch) employing sovereign ratings data for 129 countries, spanning the period 1990 to 2006. While we find that the credit rating agencies often disagree about credit quality, it is usually confined...

This paper analyses the effect of financial distress risk on the initial compensation contracts of new executives in the UK, where credit markets are more concentrated than in the US. We find that financial distress risk has a negative and statistically significant impact on the level of...

Within a sample of firms undergoing financial distress, where the incentive to send false positive signals is high, we show that insider trading serves as a credible information channel about potential recovery for outside investors. We employ credit rating downgrades as confirmation of the...

Firms placed on negative credit watch face the threat of a credit rating downgrade. At the same time, they are given the opportunity to put recovery efforts in place to retain their current credit rating. In this paper, we test to what extent firms use earnings management as a short-term...

This paper studies cross-sectional determinants of the exposure of U.K. firms to Brexit, an event which resulted in an unprecedented rise in political uncertainty. We find that internationalization has a moderating effect on Brexit exposure which goes beyond the pure currency translation effect...

We propose a novel method of measuring the comparability of reported accounting numbers from the perspective of creditors. We demonstrate the validity of the measure and show that new bond issues of firms with superior comparability have better credit ratings and reduced bond yields, ceteris...

In this paper, we investigate the spill-over of sovereign rating changes into the corporate sector across 34 countries, with a primary focus on the relative effects of positive and negative events. Positive or negative bias of such spill-overs could impact the relative speed and depth of...

We propose a method of measuring the comparability of reported accounting numbers from the perspective of creditors. Our measure reflects the relationship between market variables related to default probabilities and key accounting numbers of interest to lenders. We demonstrate that this measure...