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Table 5 Ordered Probit regression results of the credit rating and working capital relationship

From: The impact of working capital management on credit rating

\(RATING_{i,t} = a_{i,t} + \beta_{1} NWC_{i,t} + \beta_{2} SIZE _{i,t} + \beta_{3} LEV_{i,t} + \beta_{4} COVERAGE_{i,t} + \beta_{5} LOSS_{i,t} + \beta_{6} CAP\_INTEN_{i,t} + \beta_{7} SUBORD_{i,t} + \beta_{8} BIG4_{i,t} + \varepsilon_{i,t }\)
Dependent variable Rating MICRORATING Rating MICRORATING
Column 1 Column 2 Column 3 Column 4 Column 5 Column 6 Column 7 Column 8
NWC 0.324*** 0.316*** 0.345*** 0.326***     
(0.029) (0.032) (0.028) (0.029)     
CCC      0.0010*** 0.001*** 0.0011*** 0.0009***
     (0.0001) (0.001) (0.0001) (0.0001)
SIZE 0.301*** 0.489*** 0.286*** 0.480*** 0.304*** 0.490*** 0.290*** 0.481***
(0.004) (0.004) (0.003) (0.004) (0.004) (0.004) (0.003) (0.004)
COVERAGE 0.021*** 0.052*** 0.023*** 0.053*** 0.021*** 0.0519*** 0.023*** 0.053***
(0.001) (0.001) (0.001) (0.001) (0.001) (0.0009) (0.001) (0.001)
LEV  − 1.990***  − 1.624***  − 1.845***  − 1.483***  − 1.972***  − 1.617***  − 1.828***  − 1.478***
(0.033) (0.035) (0.031) (0.032) (0.033) (0.034) (0.031) (0.032)
CAP_INTEN 0.550*** 0.423*** 0.523*** 0.420*** 0.587*** 0.437*** 0.560*** 0.434***
(0.012) (0.015) (0.012) (0.014) (0.012) (0.015) (0.012) (0.014)
LOSS  − 0.797***  − 0.655***  − 0.794***  − 0.665***  − 0.796***  − 0.658***  − 0.794***  − 0.668***
(0.014) (0.014) (0.013) (0.013) (0.014) (0.0145) (0.013) (0.013)
BIG4 0.064***  − 0.001 0.079*** 0.012 0.068*** 0.0004 0.082*** 0.014
(0.012) (0.012) (0.011) (0.011) (0.012) (0.012) (0.011) (0.011)
SUBORD  − 0.102*  − 0.164***  − 0.135**  − 0.205***  − 0.199***  − 0.160***  − 0.132**  − 0.202***
(0.062) (0.064) (0.058) (0.059) (0.062) (0.063) (0.058) (0.059)
Year effect   Yes   Yes   Yes   Yes
Industry effect   Yes   Yes   Yes   Yes
Pseudo R2 0.1932 0.2874 0.1220 0.1879 0.1946 0.288 0.123 0.1883
Firm-year Observations 43,183 43,183 43,183 43,183 43,183 43,183 43,183 43,183
  1. Variables definitions are provided in Table 2. Note: standard errors are reported in parentheses. ***, **, and * indicate two-tailed significance at the 1%, 5%, and 10% levels. The results in this table are based on annual panel data of U.S. listed firms from WRDS merged with CRSP/Compustat files for the period between 1985 and 2017