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Mali, Dafydd 
ORCID: https://orcid.org/0000-0003-3582-2429 and Lim, Hyoung Joo
(2018)
The influence of firm efficiency on agency credit ratings.
Journal of Credit Risk, 15 (1).
pp. 67-102.
ISSN 1744-6619
Abstract
This paper examines the relationship between relative efficiency and credit ratings using a sample of Korean listed firms and finds a positive relationship in the subsequent period after adjusting for absolute efficiency. The results suggest that credit rating agencies consider relative efficiency as a variable that influences a firm’s ability to survive a business cycle. Interestingly, when we divide our samples into investmentgrade and non-investment-grade firms, we find a different relationship. While we continue to find consistent results for the investment-grade group, we find a negative relationship between relative efficiency and credit ratings for non-investment-grade firms.We suggest “higher” levels of efficiency by non-investment-grade firms can be considered opportunistic or a form of distress, and potentially be the result of ineffective decision making. We conjecture that credit rating agencies have the ability to impose penalties of lower credit ratings on firms that engage in such behavior.
| Item Type: | Article |
|---|---|
| Additional Information: | Publisher Copyright: © 2018 Infopro Digital Risk (IP) Limited. |
| Uncontrolled Keywords: | credit ratings,credit risk,frontier analysis,relative efficiency,finance,economics and econometrics ,/dk/atira/pure/subjectarea/asjc/2000/2003 |
| Faculty \ School: | Faculty of Social Sciences > Norwich Business School |
| Related URLs: | |
| Depositing User: | LivePure Connector |
| Date Deposited: | 22 Aug 2024 15:30 |
| Last Modified: | 25 Sep 2024 18:03 |
| URI: | https://ueaeprints.uea.ac.uk/id/eprint/96325 |
| DOI: | 10.21314/JCR.2018.242 |
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