Full metadata
Title
Management earnings guidance and future credit rating agency actions
Description
While credit rating agencies use both forward-looking and historical information in evaluating a firm's credit risk, the role of forward-looking information in their rating decisions is not well understood. In this study, I examine the association between management earnings guidance news and future credit rating changes. While upward earnings guidance is not informative for credit rating changes, downward earnings guidance is significantly and positively associated with both the likelihood and speed of rating downgrades. In cross-sectional analyses, I find that downward guidance is especially informative in two important circumstances: (i) when a firm's current credit rating is overly optimistic compared to a model predicted rating, and (ii) when the relevance or reliability of alternative information sources is lower. In addition, I find that downward guidance is associated with lower future cash flows, as well as a higher volatility of future cash flows. Overall, the results are consistent with credit rating agencies incorporating voluntary bad news disclosures into their decisions about whether and when to downgrade a firm.
Date Created
2015
Contributors
- Lin, An-Ping (Author)
- Hillegeist, Stephen (Thesis advisor)
- Hugon, Jean (Thesis advisor)
- Call, Andrew (Committee member)
- Dhaliwal, Dan (Committee member)
- Arizona State University (Publisher)
Topical Subject
Resource Type
Extent
vi, 68 p. : col. ill
Language
eng
Copyright Statement
In Copyright
Primary Member of
Peer-reviewed
No
Open Access
No
Handle
https://hdl.handle.net/2286/R.I.29731
Statement of Responsibility
by An-Ping Lin
Description Source
Viewed on June 23, 2015
Level of coding
full
Note
thesis
Partial requirement for: Ph.D., Arizona State University, 2015
bibliography
Includes bibliographical references (p. 42-45)
Field of study: Accountancy
System Created
- 2015-06-01 08:06:10
System Modified
- 2021-08-30 01:29:48
- 3 years 2 months ago
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