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Moody S Credit Ratings And The Stock Market Performance Of Portuguese Rated Firms

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  • Lu s Pacheco

Abstract

Never has the issue of sovereign credit ratings attracted such an interest by policy and opinion makers bankers and journalists or even the public opinion as witnessed in the last couple of years In spite of being accused of contributing to the instability of financial markets credit rating agencies undoubtedly have a role in financial markets affecting its performance and guiding investors decisions This paper analyzes the impact of the changes announced in Moody s ratings over the performance of a set of rated firms quoted in the Portuguese stock market Following an event study methodology we collect ratings and outlook announcements by that major credit agency over the period 2006 2011 We find a significant response of share prices to changes in ratings with that response anticipating the announcement We think that could be explained by previous sovereign rating changes or to the contagion effects of a bearish market When analyzing the period after January 2010 we observe a stronger reaction to announcements which has understandably given the greater influence and market sensitivity to rating agencies

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  • Lu s Pacheco, 2012. "Moody S Credit Ratings And The Stock Market Performance Of Portuguese Rated Firms," Journal of Advanced Studies in Finance, ASERS Publishing, vol. 3(1), pages 58-83.
    • Handle: RePEc:srs:jasf00:v:3:y:2012:i:1:p:58-83
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    Cited by:

    1. Patrycja Chodnicka – Jaworska & Piotr Jaworski, 2019. "The Chinese and The Big Three Credit Rating Agencies – their impact on stock prices," Faculty of Management Working Paper Series 22019, University of Warsaw, Faculty of Management.
    2. Deena Zaidi, 2015. "Eurozone Debt Crisis and Regulation of Credit Rating Agencies," Global Credit Review (GCR), World Scientific Publishing Co. Pte. Ltd., vol. 5(01), pages 99-111.
    3. Lucian Ivan, Dragos, 2012. "The Double Articulation of the Welfare-State: A demographic drop of jeopardy?," Working Papers 25/2012, Universidade Portucalense, Centro de Investigação em Gestão e Economia (CIGE).

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    More about this item

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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