The Impact of Sovereign Credit Ratings on Corporations: A Literature Review and Research Recommendations

During the financial crisis, sovereign ratings have come under increased public scrutiny due to their strong impact on sovereign borrowing costs and hence financial stability of countries. However, their influence on corporations within and outside the respective nations has so far attracted only li...

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Published inFinancial markets, institutions & instruments Vol. 23; no. 3; pp. 125 - 178
Main Authors Mai Nguyen, Janna, zu Knyphausen-Aufseß, Dodo
Format Journal Article
LanguageEnglish
Published Cambridge Blackwell Publishing Ltd 01.08.2014
Subjects
Borrowing
Business
Commercial credit
Costs
Credit rating
Credit ratings
Economic crisis
Economic impact
Economic stability
Economic theory
Investment
Studies
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Summary:During the financial crisis, sovereign ratings have come under increased public scrutiny due to their strong impact on sovereign borrowing costs and hence financial stability of countries. However, their influence on corporations within and outside the respective nations has so far attracted only limited attention, although several academics have provided intriguing insights in this regard. In order to obtain a structured overview of this relatively young strand of research, this paper reviews key insights and conclusions that the extant literature offers on the role of sovereign creditworthiness for corporations. Herein, it focuses on the effects that have been observed for the corporate business environment, access to capital, and foreign investment activities. Different research issues providing fertile ground for future studies are identified.
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content type line 23
ISSN:0963-8008
1468-0416
DOI:10.1111/fmii.12017