Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/314236 
Year of Publication: 
2023
Citation: 
[Journal:] Journal of Applied Economics [ISSN:] 1667-6726 [Volume:] 26 [Issue:] 1 [Article No.:] 2255444 [Year:] 2023 [Pages:] 1-18
Publisher: 
Taylor & Francis, Abingdon
Abstract: 
This paper examines how the corporate life cycle affects credit scoring. Previous empirical studies have shown that the life cycle has an impact on financial policies, creditworthiness, risk and performance. This study utilizes panel data of U.S. listed companies for the period 1985-2017. The Dickinson model, which divides the life cycle into four stages (introduction, growth, mature, and decline), is used. The Probit model is employed to investigate this relationship. The findings show that firms in the introduction, growth, and maturity stages have a favorable and significant impact on the likelihood of a positive credit rating change (upgrade). Conversely, firms in the decline stage show a negative relationship with credit rating positive upgrades. This suggests that credit rating agencies consider a firm's life cycle status. Therefore, firms should strive to reach the growth and mature phases in order to benefit from higher credit ratings.
Subjects: 
credit rating
Firm's life cycle
risk
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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