JOINT EFFECT OF DEBT FINANCING AND CREDIT RATING ON CORPORATION’S PERFORMANCE
Journal Title: Topics in Economics, Business and Management (EBM) - Year 2017, Vol 1, Issue 1
Abstract
The purpose of this paper is to examine the joint effect of debt financing and credit rating on the corporation’s performance. Using a sample of 309 US firm-year observations in the retail industry from year 2011 to 2013, we show that both debt financing and credit rating have positive relationships with corporate performance. Further, when a company has high credit rating, its debt financing ratio has no effect on its performance, while a company with low credit rating; it performs better as debt financing ratio increases. The findings can be applied by CFOs (Chief Finance Officers) in retail companies to build an efficient capital structure when considering the companies’ credit ratings. A good combination of these two enables firms to gain a bigger profit and attract more investors.
Authors and Affiliations
Wang Jianlong
Keywords
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- EP ID EP412748
- DOI 10.26480/icemi.01.2017.21.23
- Views 67
- Downloads 0
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