A novel investigation of the influence of corporate governance on firms’ credit ratings

Alkhawaldeh, Abdullah A. K.; Jaber, Jamil J.; Boughaci, Dalila; Ismail, Noriszura

doi:10.1371/journal.pone.0250242

Cited by 8 publications

(13 citation statements)

References 38 publications

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“…Therefore, we claim that a percent rise (reduction) in the explanatory variable will impact the dependent variable more (less) often. The magnitude of the coefficients, on the other hand, can therefore be inferred using the marginal effect (Wooldridge, 2010; Alkhawaldeh et al , 2021). More so, when marginal effects comprise several categories, interpretation might be confusing (Wulff, 2015; Seroka-Stolka and Fijorek, 2020).…”

Section: Empirical Findings and Discussionmentioning

confidence: 99%

Corporate governance and extent of corporate sustainability practice: the role of investor activism

Gold

Taib

2022

SRJ

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Purpose Following the unceasing pressure on companies to adopt sustainable business practices to mitigate climate effect, this study aims to examine corporate governance (CG) attributes and role of activist investors in influencing extensive sustainability practice for firms in the developed and emerging climes. Design/methodology/approach Using a panel ordered probit regression analysis for 368 companies over 2016 to 2019, the study examined CG attributes that drive extensive corporate sustainability practice. The study addressed endogeneity bias using STATA Extended panel ordered probit regression model with endogenous covariates. Findings The result showed CG attributes is critical for firms, and activist investors play a critical role in driving extensive sustainability practice. Findings further reveal the extent of adoption is relatively low in the emerging climes but showed sign of improvement over the years examined. Research limitations/implications The study focused mainly on larger firms operating in different sectors globally. Hence, findings cannot be generalized for small sized entities. Practical implications The study provides an insightful explanation regarding the extensive sustainability practices and the vital role assumed by activist investors. Social implications The increasing number of companies responding to Carbon Disclosure Project and consequent improvement in scores indicates a corporate commitment to ensuring a sustainable future. Originality/value This research offers significant insights to the extent discussion on attributes of CG critical for sustainability practice. The findings ascertain useful tools to aid the continued adoption of sound sustainability practices around the globe.

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Section: Empirical Findings and Discussionmentioning

confidence: 99%

Corporate governance and extent of corporate sustainability practice: the role of investor activism

Gold

Taib

2022

SRJ

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“…They do not affect credit rating. This invalidates hypothesis H 2c and H 2d and is in line with Alkhawaldeh et al (2021) and Demsetz and Villalonga (2001) outcomes. The result is consistent with Chen (2008) who discovered that the CEO duality is insignificantly related to company performance.…”

Section: Political Connection and Credit Ratingmentioning

confidence: 62%

“…In turn, Liu and Jiraporn (2010) find that credit ratings are lower for firms whose chief executives' officers have more decision-making power. Recently, Alkhawaldeh et al (2021) find that role duality is insignificant on credit rating. Hence, the hypothesis is stated as follows:…”

Section: Board Characteristics and Credit Ratingmentioning

confidence: 99%

The effect of political connections and governance on credit ratings: substitution versus complementary view: case of Tunisian firm

Bouaine,

Alaya,

Slim

2023

JAEE

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PurposeThe objective of this paper is to study the impact of political connection and governance on credit rating and whether there is a substitution or complementary relationship between them.Design/methodology/approachIn order to achieve the objective, a succession of eight ordered probit regressions has been carried out. Moderating variables between the political connection and governance characteristics were introduced. The whole population is taken as a sample, i.e., 27 Tunisian companies that are evaluated by FITSH NORTH AFRICA agencies over a period of 10 years (2009–2018).FindingsThe outcomes are mixed. They show that the political connection does not always influence credit rating; the size and board independence always improves credit rating; the duality between the functions affects credit rating; whereas the majorities’ proportion does not influence credit rating; and a substitution between the political connection and the governance characteristics is validated.Research limitations/implicationsLike any other research, our results are factors of our measures and variable choice and depends heavily on the how these variables were conceived. Also, although our number of observations responds to the statistical result generalization requirements, our sample remains relatively narrow with 27 companies only.Practical implicationsIn practice, the research will allow investors to have a better vision upon the future of their investments based on whether to develop their governance system or promote political networking. It will also prompt lenders to look beyond ratings and consider factors such as political connections to make a rational judgment on their future placements.Social implicationsThis study leads us to find various solutions: the establishment of credit agencies that take into consideration all the data of all the operators taken as a whole (bank, leasing company, and factoring). It encourages the reorganization of the Tunisian banking sector through mergers for example.Originality/valueThis study is a pioneer in the credit rating field in Tunisia, where the source of debt financing is the most used by all enterprises across all sectors. This study extends the literature of political connection effectiveness, independent directors, board size, in improving corporate performance and credit rating.

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“…e random e ects model is called a variance component model. Contrary to the xed e ects model, in the random e ects model, the individualspeci c e ect is a random variable that is uncorrelated with the explanatory variables [47].…”

Section: Multiple Regression Modelsmentioning

confidence: 99%

Using Artificial Intelligence to Predict Customer Satisfaction with E‐Payment Systems during the COVID‐19 Pandemic

Atawneh

Hamadneh

Jaber

et al. 2022

Journal of Mathematics

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This study explores the impact of electronic payment systems on Saudi Arabia’s customer satisfaction during the COVID-19 pandemic. Descriptive analytical approach of a sample of 1,025 people living in Saudi Arabia was used to answer the study questions and test its hypotheses. Then, a new hybrid fuzzy inference system (HyFIS) is proposed to predict customer satisfaction during COVID-19 pandemic. The proposed system contemplates customer resistance (CR), access to technology (AT), privacy (PV), costs (CT), and speed of efficiency (SE) as the input variables and customer satisfaction (CS) as the output variable. Various statistical tests are utilized to determine the efficiency of input variables in the obtained data. The statistical tests are multicollinearity tests, reliability and validity, ordinal least square (OLS), fixed effect, and random development. As a result, we can determine each input variable’s direct and indirect impact on the CS. Under OLS, fixed effect, and unexpected effect, the SE, CT, PV, AT, and CR considerably impact EP. The EP has been shown to have substantial positive indirect implications. Under OLS, fixed effect, and random effect, the CT, PV, and CR are found to have a significant positive impact on CS. In addition, the AT has a substantial impact on CS in a fixed effect indirect effect. The results of HyFIS were compared to those of the adaptive network-based fuzzy inference system (ANFIS). The results reveal that HyFIS outperforms ANFIS in predicting CS based on the error criterion.

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A novel investigation of the influence of corporate governance on firms’ credit ratings

Cited by 8 publications

References 38 publications

Corporate governance and extent of corporate sustainability practice: the role of investor activism

Corporate governance and extent of corporate sustainability practice: the role of investor activism

The effect of political connections and governance on credit ratings: substitution versus complementary view: case of Tunisian firm

Using Artificial Intelligence to Predict Customer Satisfaction with E‐Payment Systems during the COVID‐19 Pandemic

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