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Table 6 Ordered Probit regression results of the non-linear relationship between credit rating and working capital

From: The impact of working capital management on credit rating

\(\begin{aligned} RATING_{i,t} & = a_{i,t} + \beta_{1} NWC_{i,t} + \beta_{2} NWC_{i,t}^{2} + \beta_{3} SIZE_{i,t} + \beta_{4} LEV_{i,t} \\ & \quad + \beta_{5} COVERAGE_{i,t} + \beta_{6} LOSS_{i,t} + \beta_{7} CAP\_INTEN_{i,t} \\ & \quad + \beta_{8} SUBORD_{i,t} + \beta_{9} BIG4_{i,t} + \varepsilon_{i,t } \\ \end{aligned}\)
Dependent variable Rating
Column 1
NWC 0.302***
(0.032)
NWC2  − 0.032***
(0.012)
SIZE 0.489***
(0.004)
COVERAGE 0.052***
(0.001)
LEV  − 1.626***
(0.035)
CAP_INTEN 0.419***
(0.015)
LOSS  − 0.654***
(0.014)
BIG4  − 0.002
(0.012)
SUBORD  − 0.165***
(0.064)
Year effect Yes
Industry effect Yes
Pseudo R2 0.2875
Firm-year observations 43,180
  1. Variables definitions are provided in Table 2. Standard errors are reported in parentheses. ***, **, and * indicate two-tailed significance at the 1%, 5%, and 10% levels
  2. 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