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Fitch said it may cut the Tyco ratings further if the damage to the firm's credibility prevented the planned sale of its CIT financial services arm.
Evidence that managers follow a maturity-matching rule, favour capital structure's flexibility in high growth scenarios and use protective covenants when firm's credibility is low corroborates further agency predictions.
The goal of the model is to explain how the hardness of financial information in capital markets depends on the firm's credibility, on the perceived honesty of the manager and the integrity of the firm's reporting system.
But this week's gale of bad news has shattered the firm's credibility: a third restatement of reserves in four months, downgrades of its debt by leading credit agencies, and the resignation of its chief financial officer.
For Clayton, Dubilier, which has $6.6 billion in managed capital and controls Lexmark International and Kinko's among others, the appointment of Mr. Welch is a coup that analysts expect will bolster the firm's credibility and ability to win deals.
Ortner, who is married to a scientist and has five children, said the bloggers he has hired have boosted the firm's credibility, spurring more Google results, clicks and, ultimately, revenue.
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In September, Tyco Chief Executive Edward Breen Edward Breen lured FitzPatrick away from the stable realm of United Tech to help restore his firm's shattered credibility.
Mr. Stephens said the conference call created doubts at his firm about Enron's credibility.
But in a written statement provided by a media consultant, the Sloat firm questioned Smira's credibility.
Allen Sinai, president of Decision Economics, an economic forecasting firm, said Mr. Greenspan's credibility in financial markets and in political circles is almost unmatched.
If the news plays in a firm's favor, there's a credibility issue; it might need to hire accountants or lawyers to certify that the numbers are accurate.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com