Corporate sensitivity to sovereign credit distress: the mitigating effects of financial flexibility

被引:1
作者
Vu, Huong [1 ]
Klusak, Patrycja [2 ,3 ]
Khoo, Shee-Yee [4 ]
Alsakka, Rasha [4 ]
机构
[1] Univ Aberdeen, Kings Coll, Aberdeen, Scotland
[2] Univ East Anglia, Norwich Business Sch, Norwich, England
[3] Univ Cambridge, Bennett Inst Publ Policy, Cambridge, England
[4] Bangor Univ, Bangor Business Sch, Bangor, Wales
关键词
Financial flexibility; sovereign ratings; corporate ratings; spillover effect; G01; G24; G32; CAPITAL STRUCTURE; INVESTMENT ABILITY; RATINGS; DEBT; DETERMINANTS;
D O I
10.1080/1351847X.2024.2332718
中图分类号
F8 [财政、金融];
学科分类号
0202 ;
摘要
This paper investigates the role of financial flexibility in sovereign-corporate rating nexus. Using a panel data of non-financial European firms rated by S&P during 2005-2022, we show that financially flexible firms are more protected from the consequences of sovereign rating downgrades than their financially inflexible counterparts. Financial flexibility becomes particularly valuable for corporates in GIIPS countries, during the European sovereign debt crisis and the COVID-19 pandemic. Finally, private firms benefit more from financial flexibility than public firms due to their financing constraints. Our findings have implications for corporate managers, governments, and regulators alike, as financial flexibility can act as a shield against sovereign risks' shocks.
引用
收藏
页码:1728 / 1756
页数:29
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