The Journal of Finance publishes leading research across all the major fields of finance. It is one of the most widely cited journals in academic finance, and in all of economics. Each of the six issues per year reaches over 8,000 academics, finance professionals, libraries, and government and financial institutions around the world. The journal is the official publication of The American Finance Association, the premier academic organization devoted to the study and promotion of knowledge about financial economics.
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VALUATION OF INVENTORIES FOR INCOME TAX PURPOSES*
Published: 12/01/1958 | DOI: 10.1111/j.1540-6261.1958.tb04223.x
J. F. Barron
Credit Ratings and Capital Structure
Published: 05/16/2006 | DOI: 10.1111/j.1540-6261.2006.00866.x
DARREN J. KISGEN
This paper examines to what extent credit ratings directly affect capital structure decisions. The paper outlines discrete costs (benefits) associated with firm credit rating level differences and tests whether concerns for these costs (benefits) directly affect debt and equity financing decisions. Firms near a credit rating upgrade or downgrade issue less debt relative to equity than firms not near a change in rating. This behavior is consistent with discrete costs (benefits) of rating changes but is not explained by traditional capital structure theories. The results persist within previous empirical tests of the pecking order and tradeoff capital structure theories.