Financing and supervisory effects of credit ratings: evidence from mergers and acquisitions

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Qian Xu ◽  
Yuhui Wu ◽  
Lingling Zhai
Keyword(s):  
Credit Rating ◽  
Credit Ratings ◽  
Probit Model ◽  
Economic Consequences ◽  
Financial Behavior ◽  
Content Type ◽  
Emerging Capital Markets ◽  
The Impact

Purpose The purpose of this paper is to examine how credit ratings affect corporate financial behavior from the perspective of merger and acquisition (M&A) decisions. The goal is to test the financing and supervisory effects of credit ratings and study the economic consequences of credit ratings in the context of China. Design/methodology/approach Using a sample of Chinese A-share listed companies over the 2008–2017 period, this paper empirically examines the effect of credit ratings on firms’ M&A decisions. The authors used a probit model for regression when they tested the effect of credit rating on M&A likelihood and a tobit model when they tested the effect of credit rating on M&A intensity. Findings First, rated enterprises tend to make more acquisitions compared with non-rated enterprises, consistent with the hypothesis that credit ratings alleviate financing constraints. Second, high-rated enterprises are more cautious toward M&As due to concerns about preserving their ratings, which indicates that credit ratings also play a supervisory role in the M&A process. Additional tests show that enterprises reduce M&A activity after a rating downgrade to avoid further deterioration in their ratings; this further supports the supervisory role of credit ratings. Originality/value This paper adds incremental evidence to the literature on the impact of credit ratings on corporate financial behavior and extends the literature on the factors influencing M&As. The authors provided empirical evidence from emerging capital markets for the financing and supervisory effects of credit ratings and provided theoretical guidance for promoting the stable, long-term development of China’s credit rating industry.

scholarly journals The determinants of issuers’ long term credit ratings : American S&P500 index

2015 ◽  
Vol 3 (1) ◽  
pp. 78
Author(s):  
ِِAfef Feki Krichene ◽  
Walid Khoufi
Keyword(s):  
Credit Rating ◽  
Credit Ratings ◽  
Probit Model ◽  
Ordered Probit ◽  
Ordered Probit Model ◽  
Financial Policy ◽  
Significant Determinant ◽  
Short Term ◽  
The Impact

<p>In this paper, we examine the impact that various financial and business profile variables have on credit ratings issued for the S&amp;P500 firms by Moody’s. Our ordered probit model indicates that firms’ financial policy, size, liquidity, interest and debt coverage have the most pronounced effect on credit ratings. Our results show that different coefficients are associated to the increments of interest and debt coverage ratios. Business profile variables are not significant. Liquidity variable is also a significant determinant of the issuer long-term credit rating and not just the short term one.</p>

Goodwill impairment loss and bond credit rating

2017 ◽  
Vol 25 (1) ◽  
pp. 2-20 ◽  
Author(s):  
Li Sun ◽  
Joseph H. Zhang
Keyword(s):  
Regression Analysis ◽  
Credit Rating ◽  
Credit Ratings ◽  
Negative Relationship ◽  
Least Squares Regression ◽  
Firm Level ◽  
Content Type ◽  
Goodwill Impairment ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this study is to examine the impact of goodwill impairment losses on bond credit ratings. Design/methodology/approach The authors use regression analysis to examine the relationship between goodwill impairment losses and bond credit ratings. Findings The empirical results show a negative relationship between the amount of goodwill impairment losses and bond credit ratings, suggesting that firms with goodwill impairment losses receive lower credit ratings. The authors perform various additional tests, including subsamples in good or bad market time, changes analysis, first time goodwill impairment firms vs subsequent impairment and the two-stage least squares regression analysis to address potential endogeneity issues. The main results persist. Originality/value This paper links and contributes to two streams of literature: goodwill impairment in accounting literature and bond credit ratings in finance literature. Whether a firm’s goodwill impairment losses affect the firm’s bond credit rating remains an interesting question that has not been examined previously. To the best of the authors’ knowledge, this is the first study that directly examines the relationship between goodwill impairment losses and bond ratings at the firm level.

scholarly journals Wpływ COVID-19 na nastawienie i credit ratingi krajów

2020 ◽  
Vol 8 (4) ◽  
pp. 535-564
Author(s):  
Patrycja Chodnicka-Jaworska
Keyword(s):  
Financial Crisis ◽  
Foreign Currency ◽  
Credit Rating ◽  
Credit Ratings ◽  
Short Term ◽  
Rating Agencies ◽  
Thomson Reuters ◽  
The Impact ◽  
The International Monetary Fund

Covid-19 Impact on Countires’ Outlooks and Credit Ratings The aim of the study is to examine the impact of the financial crisis caused by COVID-19 on chang­es in outlooks and credit ratings of major rating agencies. The research hypothesis was as follows: the financial crisis caused by COVID-19 negatively affected the change in outlooks and credit ratings of countries. The study used long-term and short-term credit ratings and outlooks collected from the Thomson Reuters / Refinitiv database regarding liabilities expressed in foreign currency and macroeconomic data from the International Monetary Fund databases, for 2010–2021. The analysis was carried out using ordered logit panel models. The presented results showed a weak significant im­pact of the COVID-19 pandemic on credit rating. The agency that changed its notes in connection with this situation is Standard & Poor’s (S&P). However, the attitude responded to the situation un­der investigation. During the crisis, country ratings have become less sensitive to growing debt, which may be dictated by widespread loosening of fiscal policy. The rate of GDP growth has a par­ticular impact during the COVID-19 period in the event of a change of outlook. Rising inflation is particularly dangerous in the age of pandemics. It may be related to monetary policy easing.

Expatriate's engagement and burnout: the role of purpose-oriented leadership and cultural intelligence

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Flavia Cavazotte ◽  
Sylvia Freitas Mello ◽  
Lucia B. Oliveira
Keyword(s):  
Structural Equation ◽  
Design Methodology ◽  
Cultural Intelligence ◽  
Multinational Companies ◽  
Equation Modeling ◽  
Content Type ◽  
The Uk ◽  
The Impact

PurposeThis study analyzes the impact of purpose-oriented leadership and leader cultural intelligence on engagement and burnout among expatriates undertaking long-term corporate assignments, grounded on social psychology frameworks on interpersonal bias.Design/methodology/approachA survey was conducted with corporate expatriates from 21 different nationalities, who work for large multinational companies and were on assignment in 23 distinct countries – including Brazil, China, Japan and the UK Partial Least Squares Structural Equation Modeling was used to evaluate the proposed hypotheses.FindingsResults indicate that leader cultural intelligence is associated with lower burnout and higher engagement among expatriates, and that purpose-oriented leadership is associated with higher expatriate engagement but not with lower burnout.Originality/valueThis research contributes to the field by highlighting specific leader attributes that can foster successful expatriation: cultural intelligence and purpose-oriented leadership. The study adds to knowledge on leader–follower relationships amid national and cultural diversity by pointing to actionable leader qualities that can foster expatriate engagement and prevent his/her burnout.

Climate change and rice production in India: role of ecological and carbon footprint

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Pushp Kumar ◽  
Naresh Chandra Sahu ◽  
Mohd Arshad Ansari ◽  
Siddharth Kumar
Keyword(s):  
Climate Change ◽  
Carbon Footprint ◽  
Ecological Footprint ◽  
Rice Production ◽  
Least Square ◽  
Rice Crop ◽  
Content Type ◽  
The Impact

PurposeThe paper investigates the effects of climate change along with ecological and carbon footprint on rice crop production in India during 1982–2016.Design/methodology/approachThe autoregressive distributed lag (ARDL), canonical cointegration regression (CCR) and fully modified ordinary least square (FMOLS) models are used in the paper.FindingsA long-run relationship is found between climate change and rice production in India. Results report that ecological footprint and carbon footprint spur long-term rice production. While rainfall boosts rice crop productivity in the short term, it has a negative long-term impact. Further, the findings of ARDL models are validated by other cointegration models, i.e., the FMOLS and CCR models.Research limitations/implicationsThis study provides insights into the role of ecological footprint and carbon footprint along with climate variables in relation to rice production.Originality/valueIn the literature, the effects of ecological and carbon footprint on rice production are missing. Therefore, this is the first study to empirically examine the impact of climate change along with ecological footprint and carbon footprint on rice production in India.

Evolution of public-private partnership: the UK perspective through a case study approach

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Marios Adamou ◽  
Niki Kyriakidou ◽  
Jon Connolly
Keyword(s):  
Public Private Partnership ◽  
Long Term Results ◽  
Private Partnership ◽  
Content Type ◽  
System Resilience ◽  
The Uk ◽  
The Impact

Purpose Since the 1990s, the National Health Service (NHS)advisory officers have developed considerable expertise in managing the process of specifying, procuring, contracting and running public–private partnership (PPP) projects. However, there has been a relatively consistent trajectory in the findings of studies and evaluation of PPP from its initial introduction in the health sector in 1992 to the present time. Therefore, the purpose of this study is to critically evaluate the PPP experience in the UK context using a case study in the NHS. Design/methodology/approach The partnership literature is primarily focussed on process issues, and the impact of partnerships on improving outcomes cannot be assumed. By conducting a critical review on most updated research studies and innovative approaches in this area, the literature as to the place of PPPs in health in the context of the UK is critically explored and whether they have a role in system resilience is examined. A case study has be used as well to describing the processes of a PPP arrangement. Findings Health-care PPP is one of the options relating to health system resilience. However, their contribution in the NHS has been mixed, with success noted in short-term clinical and services contracts while in the long-term the value for money argument has not been proven. In theory, the role of PPPs in bringing together ingredients supporting system resilience such as finance, management and innovation in the UK has not always been successful, and NHS providers have taken the approach to exit such arrangements. Research limitations/implications More research work is needed to capture the 21st-century challenges and critical success factors during its implementation. Practical implications The creation of strong partnerships is moving service delivery away from a project-by-project approach to one that includes strategic and policy developments for long-term results. Originality/value This is a fresh discussion in the role of PPP in system resilience in the UK perspective through a case study describing an exit from a PPP arrangement.

scholarly journals Triage: line or nets? Early intervention and the youth justice system

2014 ◽  
Vol 13 (4) ◽  
pp. 147-160 ◽  
Author(s):  
Sarah Soppitt ◽  
Adele Irving
Keyword(s):  
Restorative Justice ◽  
Justice System ◽  
Design Methodology ◽  
Qualitative Data ◽  
Youth Justice ◽  
Content Type ◽  
The Impact ◽  
First Time

Purpose – The purpose of this paper is to present a discussion of the value of early diversion schemes, underpinned by the principles of restorative justice (RJ), for First Time Entrants (FTEs) into the criminal justice system (CJS). Design/methodology/approach – The paper focuses specifically on the findings of a 12-month study into the introduction of “Triage” by one Youth Offending Team (YOT) in the northeast of England. Findings – Re-offending data suggested that Triage is more effective in reducing re-offending than conventional justice practices, due to the restorative nature of the scheme. However, the qualitative data raised a number of issues, particularly relating to problems of “net-widening” and the impact of recording processes on young people's desistance, as well as the role of victim engagement in the process. These issues could undermine the long-term effectiveness of Triage and its successful application within other youth justice contexts. Originality/value – The paper aims to contribute further understanding regarding the impacts of RJ practices on reducing re-offending compared to traditional processes, and in particular, consider the role of implementation issues in the production of outcomes and impacts.

The impact of market sectors and rating agencies on credit ratings: global evidence

2019 ◽  
Vol 20 (5) ◽  
pp. 389-410
Author(s):  
Kerstin Lopatta ◽  
Magdalena Tchikov ◽  
Finn Marten Körner
Keyword(s):  
Credit Risk ◽  
Credit Rating ◽  
Credit Ratings ◽  
Content Type ◽  
Rating Agencies ◽  
Credit Rating Agency ◽  
Rating Agency ◽  
Investment Grade ◽  
The Impact ◽  
Rating Downgrades

Purpose A credit rating, as a single indicator on one consistent scale, is designed as an objective and comparable measure within a credit rating agency (CRA). While research focuses mainly on the comparability of ratings between agencies, this paper additionally questions empirically how CRAs meet their promise of providing a consistent assessment of credit risk for issuers within and between market segments of the same agency. Design/methodology/approach Exhaustive and robust regression analyses are run to assess the impact of market sectors and rating agencies on credit ratings. The examinations consider the rating level, as well as rating downgrades as a further measure of empirical credit risk. Data stems from a large global sample of Bloomberg ratings from 11 market sectors for the period 2010-2018. Findings The analyses show differing effects of sectors and agencies on issuer ratings and downgrade probabilities. Empirical results on credit ratings and rating downgrades can then be attributed to investment grade and non-investment grade ratings. Originality/value The paper contributes to current finance research and practice by examining the credit rating differences between sectors and agencies and providing assistance to investors and other stakeholders, as well as researchers, how issuers’ sector and rating agency affiliations act as relative metrics.

Competition law and policy for the EU banking sector in a period of increased economic uncertainty

2012 ◽  
Vol 54 (4) ◽  
pp. 284-301 ◽  
Author(s):  
Ilias Kapsis
Keyword(s):  
Banking Sector ◽  
Government Support ◽  
Bank Failures ◽  
The European Union ◽  
Content Type ◽  
Regulation And Supervision ◽  
The Impact ◽  
State Aids

PurposeThe purpose of this article is to discuss the long‐term impact of the current financial and economic crisis on competition in the European Union (EU) banking sector.Design/methodology/approachThe article first discusses the long term role of competition in the banking sector, commenting on policy developments prior to the crisis. Then the impact of the crisis is discussed focusing on two main areas of policy state: aids and bank regulation and supervision. The article culminates with the conclusions.FindingsThe main findings about state aids are that the efforts of the Commission to ensure that aided companies would not use the government support to distort competition seem to be working. However, given that the full impact on competition of these aids may take years to be felt, the Commission should be prepared to take action where necessary to ensure that competition will be protected. The provision of state aids could not have been avoided due to the grave systemic risks associated with bank failures. In respect of regulation and supervision, the article concluded that there is a lot of work to be done in this area to ensure that mistakes that led to the crisis will not be repeated but also that there is need for the Commission to ensure that the reforms to the regulatory and supervisory architecture do not occur at the expense of competition.Originality/valueThe article contains proposals about policy adjustments, thus contributing to the ongoing debate about the role of competition policy in the efforts to address the impact of the crisis.

Relational bonding strategies in the franchise industry: the moderating role of duration of the relationship

2015 ◽  
Vol 30 (7) ◽  
pp. 830-841 ◽  
Author(s):  
Yong-ki Lee ◽  
Sally Kim ◽  
Min-Seong Kim ◽  
Jae-Han Lee ◽  
Ki-Taek Lim
Keyword(s):  
Design Methodology ◽  
Research Model ◽  
Content Type ◽  
Different Types ◽  
The Impact ◽  
The Relationship ◽  
Moderating Role ◽  
Practical Implications

Purpose – This paper aims to examine the effect of different relational bonding strategies on franchisees’ perceptions of benefits. The duration of the relationship is framed as a moderator between three types of relational bonds and the perceived benefits. Design/methodology/approach – The data are collected via a survey from foodservice franchisees in South Korea. To test the study’s hypotheses, the research model was estimated with two-stage least squares. Findings – The result shows that social and structural bonds have a significant impact on franchisees’ perceptions of benefits. There are some significant interactions between different types of relational bonds and the duration of the relationship. Perceptions of benefits are found to influence satisfaction, intentions to recommend, intentions to renew the contract and long-term orientation. Practical implications – The study suggests that franchisors may want to focus on developing and strengthening social bonds, and also customize their relational approaches based on the duration of the relationship with the franchisees. Originality/value – This research illustrates the impact of three types of relational bonding strategies on franchisees’ perceptions of the benefits and also examines the significant moderating role of the duration of the relationship.

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