This study finds that as rating levels for corporate bonds improve, firms tend to increase capital investment, but this positive relationship is reduced or changed negatively with at or near BBB rating in Korea. Especially these results support that a threat of downgrading to speculative-grade discipline the managers with overinvestment preference or overconfidence. When the managers did not have overinvestment preference or overconfidence, the effect of investment-grade cut-offs disappear or decreases. This study then has implications for the literature on the credit rating and investment decisions and the studies on behavioral corporate finance.