We study the capital structure reactions of firms that have been added to Standard & Poor's CreditWatch list in order to test the role of credit ratings in firm financial decisions. Survey evidence by Graham and Harvey (2001) indicates that CFOs consider credit ratings as the second most...

This paper revisits recent investigations into the role credit ratings play in the marginal financing behavior of firms. While it has long been documented that credit ratings may be an important determinant of firm capital structure policy, academics have only recently subjected this motivation...

We explore the effect of director social capital, directors with large and influential networks, on credit ratings. Using a sample of 11,172 firm-year observations from 1999 to 2011, we find that larger board networks are associated with higher credit ratings than both firm financial data and...

We explore the impact of director social capital on credit ratings. Social capital is often associated with trust and cultivated through one's personal networks. We show that firms which employ well-connected directors benefit with a higher credit rating. This result is amplified for firms that...