Next Article in Journal
Modeling Financial System with Interbank Flows, Borrowing, and Investing
Previous Article in Journal
Peer-To-Peer Lending: Classification in the Loan Application Process
Previous Article in Special Issue
A Maximal Tail Dependence-Based Clustering Procedure for Financial Time Series and Its Applications in Portfolio Selection
Article Menu
Issue 4 (December) cover image

Export Article

Open AccessArticle
Risks 2018, 6(4), 130; https://doi.org/10.3390/risks6040130

National Culture and Corporate Rating Migrations

Department of Economics and Finance, University of Canterbury, Christchurch 8140, New Zealand
Received: 14 October 2018 / Revised: 6 November 2018 / Accepted: 7 November 2018 / Published: 14 November 2018
(This article belongs to the Special Issue Risk, Ruin and Survival: Decision Making in Insurance and Finance)
Full-Text   |   PDF [1386 KB, uploaded 20 November 2018]   |  

Abstract

The informal constraints that arise from the national culture in which a firm resides have a pervasive impact on managerial decision making and corporate credit risk, which in turn impacts on corporate ratings and rating changes. In some cultures, firms are naturally predisposed to rating changes in a particular direction (downgrade or upgrade) while, in other cultures, firms are more likely to migrate from the current rating in either direction. This study employs a survival analysis framework to examine the effect of national culture on the probability of rating transitions of 5360 firms across 50 countries over the period 1985–2010. Firms located in long-term oriented cultures are less likely to be downgraded and, in some cases, more likely to be upgraded. Downgrades occur more often in strong uncertainty-avoiding countries and less often in large power distance (hierarchy) and embeddedness countries. There is some evidence that masculinity predisposes firms to more rating transitions. Studying culture helps enrich our understanding of corporate rating migrations, and helps develop predictive models of corporate rating changes across countries. View Full-Text
Keywords: national culture; survival analysis; hazard model; rating migrations national culture; survival analysis; hazard model; rating migrations
Figures

Figure 1

This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).
SciFeed

Share & Cite This Article

MDPI and ACS Style

Dang, H.D. National Culture and Corporate Rating Migrations. Risks 2018, 6, 130.

Show more citation formats Show less citations formats

Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.

Related Articles

Article Metrics

Article Access Statistics

1

Comments

[Return to top]
Risks EISSN 2227-9091 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
Back to Top