Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5089136 | Journal of Banking & Finance | 2013 | 11 Pages |
Abstract
Although credit rating agencies have gradually moved away from a policy of never rating a corporation above the sovereign (the 'sovereign ceiling'), it appears that sovereign credit ratings remain a significant determinant of corporate credit ratings. We examine this link using data for advanced and emerging economies over the period of 1995-2009. Our main result is that a sovereign ceiling continues to affect the rating of corporations. The results also suggest that the influence of a sovereign ceiling on corporate ratings remains particularly significant in countries where capital account restrictions are still in place and with high political risk.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Eduardo Borensztein, Kevin Cowan, Patricio Valenzuela,