{"title":"Corporate integrity culture and credit rating assessment","authors":"Xin Bao , Meini Han , Raymond Lau , Xiaowei Xu","doi":"10.1016/j.intfin.2024.102007","DOIUrl":null,"url":null,"abstract":"<div><p>Recent research has started to acknowledge the vital role of soft information in shaping credit rating outcomes. We extend this literature by investigating the effect of corporate integrity culture on the credit rating process and document a significant positive relationship between a culture of integrity and corporate credit ratings. We further show that this relationship is from both an indirect effect of integrity on a reduced financial risk, and a direct effect of integrity in signalling the creditworthiness of the underlying firm. When an alternative signalling device, such as firm reputation, earnings management activity, and Carbon Disclosure Project involvement, contradicts with integrity culture, integrity is no longer a significant predictor of credit ratings. Our results suggest that corporate culture plays an important role in the credit rating assessment process.</p></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"93 ","pages":"Article 102007"},"PeriodicalIF":5.4000,"publicationDate":"2024-05-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of International Financial Markets Institutions & Money","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1042443124000738","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
Recent research has started to acknowledge the vital role of soft information in shaping credit rating outcomes. We extend this literature by investigating the effect of corporate integrity culture on the credit rating process and document a significant positive relationship between a culture of integrity and corporate credit ratings. We further show that this relationship is from both an indirect effect of integrity on a reduced financial risk, and a direct effect of integrity in signalling the creditworthiness of the underlying firm. When an alternative signalling device, such as firm reputation, earnings management activity, and Carbon Disclosure Project involvement, contradicts with integrity culture, integrity is no longer a significant predictor of credit ratings. Our results suggest that corporate culture plays an important role in the credit rating assessment process.
期刊介绍：
International trade, financing and investments, and the related cash and credit transactions, have grown at an extremely rapid pace in recent years. The international monetary system has continued to evolve to accommodate the need for foreign-currency denominated transactions and in the process has provided opportunities for its ongoing observation and study. The purpose of the Journal of International Financial Markets, Institutions & Money is to publish rigorous, original articles dealing with the international aspects of financial markets, institutions and money. Theoretical/conceptual and empirical papers providing meaningful insights into the subject areas will be considered. The following topic areas, although not exhaustive, are representative of the coverage in this Journal. • International financial markets • International securities markets • Foreign exchange markets • Eurocurrency markets • International syndications • Term structures of Eurocurrency rates • Determination of exchange rates • Information, speculation and parity • Forward rates and swaps • International payment mechanisms • International commercial banking; • International investment banking • Central bank intervention • International monetary systems • Balance of payments.
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