Credit ratings and firm life-cycle

Magnus Blomkvist; Anders Löflund; Hitesh Vyas

doi:10.1016/j.frl.2020.101598

Credit ratings and firm life-cycle

Magnus Blomkvist, Anders Löflund^*, Hitesh Vyas

^*Corresponding author for this work

Finance, Helsinki

Research output: Contribution to journal › Article › Scientific › peer-review

5 Citations (Scopus)

Abstract

Credit ratings display an inverse U-shaped relation over the corporate life-cycle. Firms’ likelihood to obtain a rating initially increases over the life-cycle as reputation increases and asymmetric information is reduced. As investment opportunities diminish during the shakeout and decline phases the benefit of having a rating decreases. The economic effect is substantial: transitioning from the introduction to the growth phase increases the rating likelihood from 6.7% to 30%.

Original language	English
Article number	101598
Peer-reviewed scientific journal	Economics Letters
Issue number	5
Number of pages	5
ISSN	0165-1765
DOIs	https://doi.org/10.1016/j.frl.2020.101598
Publication status	Published - 24.05.2020
MoE publication type	A1 Journal article - refereed

Keywords

512 Business and Management
credit ratings
life-cycle
corporate finance
dynamic resource based view

Areas of Strength and Areas of High Potential (AoS and AoHP)

AoS: Financial management, accounting, and governance

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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1-s2.0-S1544612319312747-mainProof, 524 KBLicence: CC BY

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Credit ratings and firm life-cycle

Abstract

Keywords

Areas of Strength and Areas of High Potential (AoS and AoHP)

UN SDGs

Access to Document

OpenUrl availability

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