Strategic archetypes, credit ratings, and cost of debt  

Dang, M., Puwanenthiren, P., Jones, E., Nguyen, T.Q., Vo, X.V. and Nadarajah, S. 2022. Strategic archetypes, credit ratings, and cost of debt  . Economic Modelling. 114 105917. https://doi.org/10.1016/j.econmod.2022.105917

TitleStrategic archetypes, credit ratings, and cost of debt  
TypeJournal article
AuthorsDang, M., Puwanenthiren, P., Jones, E., Nguyen, T.Q., Vo, X.V. and Nadarajah, S.
Abstract

We examine the impact of archetypes of strategic behavior in business, proposed by Miles and Snow (1978, 2003), on corporate credit ratings. Using a sample of U.S. non-financial firms between 1981 and 2016, we document that firms with prospector-type strategies experience significantly lower credit ratings than firms with defender- and analyzer-type approaches. Our results remain robust after controlling for firm fixed effects, using alternative model approaches, propensity score matching approach, and alternative measures. The negative effect on credit ratings is more pronounced in firms with weaker information and governance settings and during periods of high economic policy uncertainty. Further, we find prospector-type firms with weak credit ratings have a higher cost of debt. Overall, our findings stress the need for more transparent and stringent governance systems for prospector-type firms to receive favorable ratings.

KeywordsStrategic archetypes
Credit ratings
Cost of debt
Information environment
Corporate governance
Policy uncertainty
Article number105917
JournalEconomic Modelling
Journal citation114
ISSN0264-9993
Year2022
PublisherElsevier
Accepted author manuscript
License
CC BY-NC-ND 4.0
File Access Level
Open (open metadata and files)
Digital Object Identifier (DOI)https://doi.org/10.1016/j.econmod.2022.105917
Publication dates
Published online03 Jun 2022
Published in printSep 2022

Related outputs

Going Global: Evidence from India
Sivaprasad, S., Adami, R., Mathew, S. and Puwanenthiren, P. 2023. Going Global: Evidence from India. International Journal of Banking, Accounting and Finance. 13 (4), pp. 464-486. https://doi.org/10.1504/IJBAAF.2023.10055872

Audit Quality and Seasoned Equity Offerings Methods  
Dang, M., Puwanenthiren, P., Truong, C., Henry, D. and Vo, X.V. 2022. Audit Quality and Seasoned Equity Offerings Methods  . International Review of Financial Analysis. 83 102227. https://doi.org/10.1016/j.irfa.2022.102227

Does managerial tone matter for stock liquidity? Evidence from textual disclosures  
Dang, M., Puwanenthiren, P., Henry, D., Mieszko, M. and Toan, N.M. 2022. Does managerial tone matter for stock liquidity? Evidence from textual disclosures  . Finance Research Letters. 48 102917. https://doi.org/10.1016/j.frl.2022.102917

Country uncertainty, power distance, and payment methods in acquisitions
Dang, M., Hoang, Viet Anh, Jones, Edward, Henry, Darren, Le, Phuong Uyen and Puwanenthiren, Premkanth 2022. Country uncertainty, power distance, and payment methods in acquisitions. The European Journal of Finance. 28 (16), pp. 1541-1570. https://doi.org/10.1080/1351847x.2021.1971731

Do family firms pay less for external funding?
Ali, M., Miglani, S., Dang, M., Puwanenthiren, P. and Mieszko, M. 2022. Do family firms pay less for external funding? Australian Journal of Management. 47 (2), pp. 225-250. https://doi.org/10.1177/03128962211018241

Policy uncertainty and seasoned equity offerings methods
Dang, M., Puwanenthiren, P., Thai, H., Mazur, M., Jones, E. and Xuan Vinh, V. 2021. Policy uncertainty and seasoned equity offerings methods. International Review of Financial Analysis. 77 101830. https://doi.org/10.1016/j.irfa.2021.101830

Global Policy Uncertainty and Cross-Border Acquisitions
Dang, M., Nguy, N.V., Mazuren, M., Puwanenthiren, P. and Nguyen, N.T. 2021. Global Policy Uncertainty and Cross-Border Acquisitions. The Quarterly Review of Economics and Finance. 80, pp. 224-235. https://doi.org/10.1016/j.qref.2021.01.020

The impact of audit quality in rights offerings
Balachandran, B., Faff, R., Nguyen, L.H.G. and Puwanenthiren, P. 2020. The impact of audit quality in rights offerings. Accounting & Finance. 60 (3), pp. 2007-2037. https://doi.org/10.1111/acfi.12429

Does Managerial ability matter for the choice of Seasoned Equity offerings?
Puwanenthiren, P., Dang, M., Henry, D., Puwanenthiren, P. and Al Mamun, M. 2019. Does Managerial ability matter for the choice of Seasoned Equity offerings? North American Journal of Economics and Finance. 47, pp. 442-460. https://doi.org/10.1016/j.najef.2018.06.002

Permalink - https://westminsterresearch.westminster.ac.uk/item/vww55/strategic-archetypes-credit-ratings-and-cost-of-debt


Share this

Usage statistics

93 total views
32 total downloads
These values cover views and downloads from WestminsterResearch and are for the period from September 2nd 2018, when this repository was created.