Dynamics of Capital Structure: Analyzing the Impact of Credit Rating Changes

Abstract

This paper delves into the intricate relationship between credit rating changes and capital structure, employing a descriptive research design to explore this dynamic interplay. Secondary data from sources include CRISIL, company filings, and prominent databases like Bloomberg, the study centres on the case of non-financial firms listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) in India. The period under scrutiny spans from 2015 to 2022, encompassing 195 non-financial firms and totalling 1203 firm-year observations after excluding financial institutions due to their distinctive debt propensity.Methodologically, the research hinges on panel least squares regression to scrutinize the repercussions of credit rating shifts on leverage.