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In the first phase of the crisis, which was characterized by extreme precaution and heightened aggregate risk, all firms drew down bank credit lines and raised cash levels. In the second phase, which followed the adoption of stabilization policies, only the highest-rated firms switched to capital markets to raise cash. Consistent with the risk of becoming a fallen angel, the lowest-quality BBB-rated firms behaved more similarly to non-investment grade firms. The observed corporate behavior reveals the significant impact of credit risk on corporate cash holdings. (JEL G01, G14, G32, G35)<\/jats:p><jats:p>Received July 13, 2020; editorial decision July 17, 2020 by Editor Andrew Ellul<\/jats:p>","DOI":"10.1093\/rcfs\/cfaa013","type":"journal-article","created":{"date-parts":[[2020,7,24]],"date-time":"2020-07-24T11:29:24Z","timestamp":1595590164000},"page":"430-471","source":"Crossref","is-referenced-by-count":440,"title":["The Risk of Being a Fallen Angel and the Corporate Dash for Cash in the Midst of COVID"],"prefix":"10.1093","volume":"9","author":[{"given":"Viral V","family":"Acharya","sequence":"first","affiliation":[{"name":"Stern School of Business, New York University, CEPR, ECGI, and NBER"}],"role":[{"vocabulary":"crossref","role":"author"}]},{"given":"Sascha","family":"Steffen","sequence":"additional","affiliation":[{"name":"Frankfurt School of Finance & Management"}],"role":[{"vocabulary":"crossref","role":"author"}]}],"member":"286","published-online":{"date-parts":[[2020,7,31]]},"reference":[{"key":"2020101503552650300_cfaa013-B1","doi-asserted-by":"crossref","first-page":"2059","DOI":"10.1111\/jofi.12056","article-title":"Aggregate risk and the choice between cash and lines of credit","volume":"68","author":"Acharya","year":"2013","journal-title":"Journal of Finance"},{"key":"2020101503552650300_cfaa013-B2","author":"Acharya","year":"2020"},{"key":"2020101503552650300_cfaa013-B3","doi-asserted-by":"crossref","first-page":"3572","DOI":"10.1093\/rfs\/hhs106","article-title":"Cash holdings and credit risk","volume":"25","author":"Acharya","year":"2012","journal-title":"Review of Financial Studies"},{"key":"2020101503552650300_cfaa013-B4","author":"Acharya","year":"2020"},{"key":"2020101503552650300_cfaa013-B5","doi-asserted-by":"crossref","first-page":"1","DOI":"10.1111\/jofi.12182","article-title":"A crisis of banks as liquidity providers","volume":"70","author":"Acharya","year":"2015","journal-title":"Journal of Finance"},{"key":"2020101503552650300_cfaa013-B6","author":"Acharya","year":"2020"},{"key":"2020101503552650300_cfaa013-B7","doi-asserted-by":"crossref","first-page":"1777","DOI":"10.1111\/j.1540-6261.2004.00679.x","article-title":"The cash flow sensitivity to cash","volume":"59","author":"Almeida","year":"2004","journal-title":"Journal of Finance"},{"key":"2020101503552650300_cfaa013-B8","first-page":"489","article-title":"Financial ratios, discriminant analysis and the prediction of corporate bankruptcy","volume":"23","author":"Altman","year":"1986","journal-title":"Journal of Finance"},{"key":"2020101503552650300_cfaa013-B9","author":"Altman","year":"2020"},{"key":"2020101503552650300_cfaa013-B10","doi-asserted-by":"crossref","first-page":"2194","DOI":"10.1093\/rfs\/hhw021","article-title":"Can changes in the cost of carry explain the dynamics of corporate cash holdings?","volume":"29","author":"Azar","year":"2016","journal-title":"Review of Financial Studies"},{"key":"2020101503552650300_cfaa013-B11","doi-asserted-by":"crossref","first-page":"1985","DOI":"10.1111\/j.1540-6261.2009.01492.x","article-title":"Why do US firms hold so much more cash than they used to","volume":"64","author":"Bates","year":"2009","journal-title":"Journal of Finance"},{"key":"2020101503552650300_cfaa013-B12","doi-asserted-by":"crossref","first-page":"4912","DOI":"10.1093\/rfs\/hhy038","article-title":"Got rejected? 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