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Innovation and credit ratings, does it matter? UK evidence

Al-Najjar, Basil and Elgammal, Mohammed M. (2013) Innovation and credit ratings, does it matter? UK evidence. Applied Economics Letters, 20 (5). pp. 428-431. ISSN 1350-4851

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Abstract

This study investigates the under-researched topic of credit rating predictions in the United Kingdom, using a sample of credit rated firms from FTSE 350 nonfinancial firms for the period 1999 to 2008. We aim to provide further insights regarding the credit ratings–capital structure hypothesis and to test whether innovation impacts credit ratings. We employed logit model and ordered probit analysis. Our results show that credit ratings are improved by innovation, profitability, growth, size, and reduction of leverage and business risk. However, firms with more innovation activities than internal optimum level have lower ratings. These results provide evidence that credit ratings can be viewed within the context of capital structure theory.

Item Type: Article
Uncontrolled Keywords: credit ratings, panel data, innovation, leverage
Subjects: H Social Sciences > HG Finance
Schools: Huddersfield Business School
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Depositing User: Basil Al-Najjar
Date Deposited: 14 Aug 2017 08:31
Last Modified: 14 Aug 2017 08:31
URI: http://eprints.hud.ac.uk/id/eprint/32780

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