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Innovation and credit ratings, does it matter? UK evidence

Al-Najjar, Basil and Elgammal, 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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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
Keyword(s) / Subject(s): credit ratings, panel data, innovation, leverage
School or Research Centre: Birkbeck Schools and Research Centres > School of Business, Economics & Informatics > Management
Depositing User: Dr Basil Al-Najjar
Date Deposited: 26 Oct 2012 12:14
Last Modified: 14 Jun 2013 10:06

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