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The impact of international diversification on credit scores: Evidence from the UK
,
Ahmad Alshehabi,
Geoffrey Wood,
Zaheer Khan,
Godfred Afrifa
International Business Review, Volume: 30, Issue: 6, Start page: 101856
Swansea University Author:
Hussein Halabi
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DOI (Published version): 10.1016/j.ibusrev.2021.101856
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 diversifica...
| Published in: | International Business Review |
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| ISSN: | 0969-5931 |
| Published: |
Elsevier BV
2021
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| Online Access: |
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| URI: | https://cronfa.swan.ac.uk/Record/cronfa56701 |
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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. |
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| Keywords: |
International diversification; Credit score; Innovation; Competition; Exporting firm; SMEs |
| College: |
Faculty of Humanities and Social Sciences |
| Issue: |
6 |
| Start Page: |
101856 |