Investors rely on credit ratings to assess companies in South Africa. A study looked at how stock prices react to changes in credit ratings from 2005 to 2015. They found that when a company's credit rating goes up, the stock price doesn't change much because the market already expects it. But when a company's credit rating goes down, the stock price drops significantly. This suggests that only downgrades contain important information for investors. Factors like interest cover and earnings can help companies manage their credit ratings. In South Africa, the market reacts negatively to credit rating downgrades, similar to how it happens in the USA.