In this paper, we examine how bond rating downgrades affect common stock prices in China by using the data of all the bond rating downgrades in China during the period from 1 January 2008 to 30 May 2016. To provide empirical evidence for the theory in Goh and Ederington (1993), we classify the samples according to the downgrade reasons and the bonds’time to maturity and examine the abnormal returns of each group in different windows. The empirical results show that the downgrades due to deterior