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Linköping University, Department of Management and Economics.
Linköping University, Department of Management and Economics.
2004 (Swedish)Independent thesis Advanced level (degree of Magister)Student thesisAlternative title
The value of corporate rating (English)
Abstract [en]

Background: Increasingly, companies choose to finance their business with corporate bonds which has resulted in an increased demand on credit ratings. As such the rating agencies have a very important role in the financial markets. Examining the value of a credit-rating can be very interesting for both issuer and investor.

Purpose: The purpose of the study is to identify and define the value of rating.

Execution: The study is built upon nine interviews with rated and non-rated firms and investors.

Result: The most important value of rating is the greater access to the corporate- and CP market. This infers that additional capital can be issued, in comparison to that available from bank loans, however, not necessarily at a lower rate. Consequently, the rate is not the driving factor concerning the choice of buying a rating. Rating has great effect on the pricing of bonds and CP’s, which is a result of the reliance investors have on the rating agencies. Rating affects the investment decision directly through the investment mandates, and indirectly through the effect on the individual investment decision.

Place, publisher, year, edition, pages
Ekonomiska institutionen , 2004.
Master Thesis in Business Administration (Magisteruppsats från Ekonomprogrammet), 2004:18
Keyword [en]
Business and economics, rating, corporate bond, Standard and Poor’s
Keyword [sv]
National Category
Economics and Business
URN: urn:nbn:se:liu:diva-2497OAI: diva2:19830
Available from: 2004-09-20 Created: 2004-09-20

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