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The impact of international diversification on credit scores: Evidence from the UK

Hussein Halabi Orcid Logo, Ahmad Alshehabi, Geoffrey Wood, Zaheer Khan, Godfred Afrifa

International Business Review, Volume: 30, Issue: 6, Start page: 101856

Swansea University Author: Hussein Halabi Orcid Logo

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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 diversifica...

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Published in: International Business Review
ISSN: 0969-5931
Published: Elsevier BV 2021
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URI: https://cronfa.swan.ac.uk/Record/cronfa56701
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first_indexed 2021-04-19T23:51:21Z
last_indexed 2021-11-24T04:13:09Z
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spelling 2021-11-23T14:28:27.5133037 v2 56701 2021-04-20 The impact of international diversification on credit scores: Evidence from the UK f7e6b4295ab6a82be92bdd4e99587e73 0000-0003-4951-9981 Hussein Halabi Hussein Halabi true false 2021-04-20 BAF 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. Journal Article International Business Review 30 6 101856 Elsevier BV 0969-5931 International diversification; Credit score; Innovation; Competition; Exporting firm; SMEs 30 4 2021 2021-04-30 10.1016/j.ibusrev.2021.101856 COLLEGE NANME Accounting and Finance COLLEGE CODE BAF Swansea University 2021-11-23T14:28:27.5133037 2021-04-20T00:48:20.9506081 School of Management Accounting and Finance Hussein Halabi 0000-0003-4951-9981 1 Ahmad Alshehabi 2 Geoffrey Wood 3 Zaheer Khan 4 Godfred Afrifa 5 Under embargo Under embargo 2021-04-20T15:51:15.8596840 Output 722066 application/pdf Accepted Manuscript true 2022-10-30T00:00:00.0000000 ©2021 All rights reserved. All article content, except where otherwise noted, is licensed under a Creative Commons Attribution Non-Commercial No Derivatives License (CC-BY-NC-ND) true eng https://creativecommons.org/licenses/by-nc-nd/4.0/
title The impact of international diversification on credit scores: Evidence from the UK
spellingShingle The impact of international diversification on credit scores: Evidence from the UK
Hussein Halabi
title_short The impact of international diversification on credit scores: Evidence from the UK
title_full The impact of international diversification on credit scores: Evidence from the UK
title_fullStr The impact of international diversification on credit scores: Evidence from the UK
title_full_unstemmed The impact of international diversification on credit scores: Evidence from the UK
title_sort The impact of international diversification on credit scores: Evidence from the UK
author_id_str_mv f7e6b4295ab6a82be92bdd4e99587e73
author_id_fullname_str_mv f7e6b4295ab6a82be92bdd4e99587e73_***_Hussein Halabi
author Hussein Halabi
author2 Hussein Halabi
Ahmad Alshehabi
Geoffrey Wood
Zaheer Khan
Godfred Afrifa
format Journal article
container_title International Business Review
container_volume 30
container_issue 6
container_start_page 101856
publishDate 2021
institution Swansea University
issn 0969-5931
doi_str_mv 10.1016/j.ibusrev.2021.101856
publisher Elsevier BV
college_str School of Management
hierarchytype
hierarchy_top_id schoolofmanagement
hierarchy_top_title School of Management
hierarchy_parent_id schoolofmanagement
hierarchy_parent_title School of Management
department_str Accounting and Finance{{{_:::_}}}School of Management{{{_:::_}}}Accounting and Finance
document_store_str 0
active_str 0
description 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.
published_date 2021-04-30T04:12:25Z
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