Innovation and credit ratings, does it matter? UK evidence

Basil Al-Najjar, Mohammed M Elgammal

Research output: Contribution to journalArticle

6 Citations (Scopus)

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.
Original languageEnglish
Pages (from-to)428-431
Number of pages4
JournalApplied Economics Letters
Volume20
Issue number5
Early online date30 Jul 2012
DOIs
Publication statusPublished - 2013
Externally publishedYes

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Credit rating
Innovation
Credit
Prediction
Business risk
Capital structure
Profitability
Innovation activities
Ordered probit
Probit analysis
Leverage
Logit model
Rating

Cite this

Al-Najjar, Basil ; Elgammal, Mohammed M. / Innovation and credit ratings, does it matter? UK evidence. In: Applied Economics Letters. 2013 ; Vol. 20, No. 5. pp. 428-431.
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Innovation and credit ratings, does it matter? UK evidence. / Al-Najjar, Basil; Elgammal, Mohammed M.

In: Applied Economics Letters, Vol. 20, No. 5, 2013, p. 428-431.

Research output: Contribution to journalArticle

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