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Credit Ratings and Acquisitions

Aktas, Nihat; Petmezas, Dimitris; Servaes, Henri; Karampatsas, Nikolaos

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Nihat Aktas

Henri Servaes

Nikolaos Karampatsas


There is a curvilinear relation between credit ratings and acquisitions. Non-investment grade firms make more acquisitions as their ratings improve, consistent with the relaxation of financial constraints. However, this pattern reverses for investment grade firms, supporting the view that such firms want to preserve their rating and are concerned about acquisition-related downgrades. Abnormal returns first decrease and then increase as ratings improve. In support of these findings, acquisitions have a negative impact on future ratings only for highly-rated firms. These results indicate that the level of a firm’s credit rating has a significant impact on the acquisition process.


Aktas, N., Petmezas, D., Servaes, H., & Karampatsas, N. (2021). Credit Ratings and Acquisitions. Journal of Corporate Finance, 69, Article 101986.

Journal Article Type Article
Acceptance Date May 22, 2021
Online Publication Date Jun 2, 2021
Publication Date 2021-08
Deposit Date May 24, 2021
Publicly Available Date Jun 2, 2023
Journal Journal of Corporate Finance
Print ISSN 0929-1199
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 69
Article Number 101986
Public URL


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