The impact of credit ratings on capital structure (The case of listed companies on hose)
Abstract
This research aims to examine the impact of credit ratings influencing the capital
structure of listed enterprises on Hochiminh Stock Exchange. The research data were
collected from 239 listed enterprises over the period of 4 years in the period between
2009 and 2012 to use for Panel data method. The research would conduct test
assumptions to define the optimal regression model among Pooled OLS, Fixed Effects
Models and Random Effect Model.
The thesis has two empirical models :
- The first empirical model investigates whether the firm which has a higher credit
rating, have lower financial leverage than those with lower credit ratings. The study finds
that credit ratings are an important determinant of the capital structures of firms and that
there is a strong relationship between credit ratings and capital structures.
- The second empirical model examines the influence of the change of credit
ratings between each year on the short term debt to equity of listed firms on Hochiminh
stock exchange. Consistent with the predictions, the results indicate that firms‘ change of
credit rating significantly influenced on the following year‘s short term debt of the firm.
Keywords: credit ratings, capital structure