Managerial Ability and Credit Ratings

• 成果类型: Article
• 署名作者: Cornaggia, Kimberly J.; Krishnan, Gopal V.; Wang, Changjiang
• 署名单位: Pennsylvania Commonwealth System of Higher Education (PCSHE); Pennsylvania State University; Pennsylvania State University - University Park; Bentley University; University System of Ohio; University of Cincinnati
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12334
• 发表日期: 2017
• 页码: 2094-2122
• 关键词: CORPORATE GOVERNANCE; RISK; agencies; FIRMS; INFORMATION; management; banks; QUALITY; IMPACT; COSTS

摘要

We test whether credit rating analysts consider managerial ability as a credit risk factor and find that higher-ability managers obtain more favorable credit ratings. Controlling for past performance, these results suggest that managerial ability is itself a significant credit rating factor. Cross-sectional analyses indicate that managerial ability is beneficial specifically in firms facing financial or competitive pressure. We find that high-ability managers mitigate the adverse impact on ratings of other credit risk factors including negative earnings and low interest coverage. Our results contribute to a growing literature documenting economic benefits to hiring and retaining high-quality management.