An Inverse Problem Study: Credit Risk Ratings as a Determinant of Corporate Governance and Capital Structure in Emerging Markets: Evidence from Chinese Listed Companies

摘要

Credit risk rating is shown to be a relevant determinant in order to estimategood corporate governance and to self-optimize capital structure. Theconclusion is argued from a study on a selected (and justified) sample of (182)companies listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchangeand which use the same Shanghai Brilliance Credit Rating & Investors ServiceCompany assessment criteria, for their credit ratings, from 2010 to 2015.Practically, 3 debt ratios are examined in terms of 11 characteristicvariables. Moreover, any relationship between credit rating and corporategovernance can be thought to be an interesting finding. The relationshipbetween credit rating and leverage is not as evident as that found by otherresearchers from different countries; it is significantly positively related tothe outside director, firm size, tangible assets and firm age, and CEO andchairman office plurality. However, leverage is found to be negativelycorrelated with board size, profitability, growth opportunity, and non-debt taxshield. Credit rating is positively associated with leverage, but in a lesssignificant way. CEO-Board chairship duality is insignificantly related toleverage. The non-debt tax shield is significantly correlated with leverage.The correlation coefficient between CEO duality and auditor is positive butweakly significant, but seems not consistent with expectations. Finally,profitability cause could be regarded as an interesting finding. Indeed, thereis an inverse correlation between profitability and total debt (Notice that theresult supports the pecking order theory). In conclusion, it appears thatcredit rating has less effect on the so listed large Chinese companies than inother countries. Nevertheless, the perspective of assessing credit risk ratingby relevant agencies is indubitably a recommended time dependent leveragedeterminant.