The Announcement Effects of Preferred Stock Re‐ratings

This paper examines the equity return behavior of firms whose preferred stock ratings have been changed by Standard and Poor's. The evidence indicates that the market anticipates the re‐ratings by approximately 40 days for the complete sample. However, the downgrades for the utility subsample do not experience any downward drift before or after the re‐rating. In general, these results support the previous findings of Pinches and Singleton (1978) and Weinstein (1977).