ERM - Credit Rating and Hedging Impacts (Do credit ratings incorporate firms' risk management?)

This study investigates the relation between firm risks and credit rating for a larger sample of US-firms over the period 2005-2010. The information risk is related to the degradation of the results of the firm, for example the impossibility to honour his debts, his productivity, his quality of management, his losses, his deterioration of assets or his taxes. Therefore in our research, we distinguish between multiple factors linked to firm’s risk: the market risk, financial risk, accounting quality, corporate governance, taxes and pension and we analyze the impact of these variables on the credit rating level.