Halabi, Hussein, Alshehabi, Ahmad, Wood, Geoffrey, Khan, Zaheer and Afrifa, Godfred
2021.
The impact of international diversification on credit scores: Evidence from the UK.
International Business Review
30
(6)
, 101856.
10.1016/j.ibusrev.2021.101856
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Abstract
Despite the great deal of previous research into international diversification, we know little about the impact of international diversification on firms’ credit scores. Drawing upon the resource-based view and transaction cost economics, we examine the relationship between international diversification and credit scores by using a large sample of 6,557 UK firms between 2016 and 2017. We find an inverted U-shaped relationship between international diversification and firms’ credit scores, indicating that the effect of international diversification on credit scores is initially positive but becomes negative with over-diversification. In addition, we find that R&D intensity positively moderates the relationship between international diversification and credit score, implying that the credit scores of highly diversified firms improve as they increase their investment in R&D. Further analysis suggests that a firm’s credit score becomes less dependent on international diversification for large firms, firms in concentrated industries, firms in the manufacturing sector, and firms distant from key metropolitan areas, such as London.
| Item Type: | Article |
|---|---|
| Date Type: | Publication |
| Status: | Published |
| Schools: | Schools > Business (Including Economics) |
| Publisher: | Elsevier |
| ISSN: | 0969-5931 |
| Date of First Compliant Deposit: | 18 November 2022 |
| Date of Acceptance: | 18 April 2021 |
| Last Modified: | 22 Nov 2024 01:15 |
| URI: | https://orca.cardiff.ac.uk/id/eprint/154163 |
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