Table 8 Ordered Probit regression results of the relationship between credit rating and deviation from optimal working capital
From: The impact of working capital management on credit rating
\(\begin{aligned} RATING_{i,t } & = a_{0} + \delta_{1} DEV_{i,t } + \delta_{2} DEV_{i,t} *above + \delta_{3} SIZE_{i,t } + \delta_{4} LEV_{i,t } + \delta_{5} COVERAGE_{i,t } \\ & \quad + \delta_{6} LOSS_{i,t } + \delta_{7} CAP_{INTEN\;i,t} + \delta_{8} SUBORD_{i,t } + \delta_{9} BIG4_{i,t} + \varepsilon_{i,t } \\ \end{aligned}\) | ||
|---|---|---|
Dependent variable | Rating | |
Column 1 | Column 2 | |
DEV | − 0.009*** | − 0.010*** |
(0.001) | (0.001) | |
DEV*ABOVE | 0.0020*** | |
(0.0002) | ||
SIZE | 0.503*** | 0.507*** |
(0.005) | (0.005) | |
COVERAGE | 0.056*** | 0.056*** |
(0.001) | (0.001) | |
LEV | − 1.528*** | − 1.520*** |
(0.038) | (0.038) | |
CAP_INTEN | 0.318*** | 0.339*** |
(0.017) | (0.172) | |
LOSS | − 0.638*** | − 0.635*** |
(0.016) | (0.016) | |
BIG4 | − 0.017 | − 0.017 |
(0.013) | (0.013) | |
SUBORD | − 0.136* | − 0.131* |
(0.072) | (0.072) | |
Year effect | Yes | Yes |
Industry effect | Yes | Yes |
Pseudo R2 | 0.2883 | 0.2892 |
Firm-year observations | 37,923 | 37,923 |
Likelihood-ratio test | (0.000) | |