We test the Credit Ratings-Capital Structure Hypothesis (CR-CS) that credit ratings afect capital structure decisions of firms, using 695 firms listed on the Korea Stock Exchange. We also examine whether CR-CS is efective in the empirical models of the tradeof capital structure theory. Korea underwent structural changes since the currency crisis of 197. Our sample period is divided into the pre-crisis term of 1995 to 19 97 and the post-crisis term of 1998 to 2005. Our empiric al results are as follows.First, the CR-CS is not supported in the former term but suppor ted in the latter term. Second, while the variable turns out to be not significant, the variable has a significantly negative efect on the debt ratio, reflecti ng an upward bias in the Korean ratings. Third, variables of credit ratings are also significan tly negative in the tradeoff models.