Innovation and credit ratings, does it matter?: UK evidence/ created by Basil Al-Najjar and Mohammed Elgammal

By:

Al-Najjar, Basil [author]

Contributor(s):

Elgammal, Mohammed M [co author]

Material type: Text

TextSeries: Applied economics letters ; Volume 20, number 5New York: Taylor and Francis, 2013Content type:

text

Media type:

unmediated

Carrier type:

volume

ISSN:

13504851

Subject(s):

Credit ratings -- Panel data -- Innovation

LOC classification:

HB1.A666 APP

Online resources:

Click here to access online

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.

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Item type	Current library	Call number	Vol info	Copy number	Status	Notes	Date due	Barcode
Journal Article	Main Library - Special Collections	HB1.A666 APP (Browse shelf(Opens below))	Vol. 20, no.4 (pages 428-431)	SP17976	Not for loan	For in house use only

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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.

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