Change search
ReferencesLink to record
Permanent link

Direct link
Outside Influences: How Moody's Credit Ratings Impact the Swedish Stock Market
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Business Administration.
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Business Administration.
2013 (English)Independent thesis Advanced level (professional degree), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

The credit rating industry is a global industry with only three major actors, Moody’s, Standard & Poor’s and Fitch Ratings. The “big three” control the majority of the credit rating market and have powers, in the form of credit rating issuances, which they use to influence financial markets worldwide. Ever since their involvement in the fall of corporate giants in early 2000 and the financial crisis of 2008, the power and influence of the credit rating agencies, as well as questions regarding conflict of interest and transparency, have been a hot topic of debate.


The impact of credit ratings can be seen across multiple markets; however the focus of this study is on the stock market where every day investors can be affected. As Moody’s is one of the three largest CRAs in the world and is present worldwide, we apply their credit ratings when investigating the impact. Due to different characteristics of large and small markets, and since the US market is well studied; this study is conducted on the Swedish market. Thus, the aim of our study is to investigate the impact credit ratings from Moody’s have on the Swedish stock market and also, give a perspective on how the financial crisis of 2008 influences the potential impact.


We apply an event study method to isolate the events and measure the abnormal returns. To estimate the expected market return we use the market model on estimation periods of 60 to 120 days. The sample contains 71 individual credit rating changes from 17 firms listed on the Stockholm Stock Exchange and considers all uncontaminated credit rating changes issued by Moody’s on the Swedish market during the time period of 1990 to 2012.


Empirical evidence showed that the Swedish stock market is susceptible to Moody’s negative credit ratings but almost unaffected by the positive credit ratings. These findings are in line with previous research of Holthausen & Leftwich (1986) amongst others. Still, the effects discovered were not prolonged and no clear difference in impact was found after 2008. 

Place, publisher, year, edition, pages
2013. , 73 p.
Keyword [en]
Moody's, Credit ratings, Dylan, Event study, Sweden
National Category
Business Administration
URN: urn:nbn:se:umu:diva-76441OAI: diva2:636134
Educational program
International Business Program
Social and Behavioural Science, Law
Available from: 2013-08-06 Created: 2013-07-08 Last updated: 2013-08-06Bibliographically approved

Open Access in DiVA

Dylan(1766 kB)159 downloads
File information
File name FULLTEXT01.pdfFile size 1766 kBChecksum SHA-512
Type fulltextMimetype application/pdf

By organisation
Business Administration
Business Administration

Search outside of DiVA

GoogleGoogle Scholar
Total: 159 downloads
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

Total: 217 hits
ReferencesLink to record
Permanent link

Direct link