Modeling Customers Credit Rating Based on Life Cycle and Financial Ratios: Approach of Discriminant Analysis

Subject Areas : Journal of Investment Knowledge

abdolreza  valiolahi ¹ (Department of Business Management, Qeshm Branch, Islamic Azad University, Qeshm, Iran)
vahidreza  mirabi ² (Department of Business Management, Tehran Central Branch, Islamic Azad University, Tehran, Iran)
mohmmad hosein  ranjbar ³ (Department of Management and Accounting, Bandar Abbas Branch, Islamic Azad University, Bandar Abbas, Iran)

Received: 2020-09-23 Accepted : 2020-10-13 Published : 2023-06-22

Keywords: Discriminant analysis, Financial Ratios, Legal Customers, credit rating,

Abstract :

The aim of this study was to present a model of legal customers credit rating based on financial ratios and firm life cycle. The statistical population of research consist the all legal customers of bank of industry and mine in 2019 in a number of 132 firms. So, a number of 11 financial ratios beside of firms’ life cycle were studied through the analysis of variance test, independent test of chi-square and discriminant analysis and the results showed that firms’ financial ratios in different credit rates, are statistically different. Also the findings indicated that there is significant relationship between firms’ life cycle and credit rates and distinguished through discriminant analysis that using this method and estimating discriminant functions can determine the credit rate of firms with the accuracy of 97.7 percent.

References:

• امین پور جوبنی، عباس؛ شمس قارنه، ناصر؛ اصفهانی پور، اکبر (1395). رتبه بندی اعتباری شرکت ها با استفاده از رویکرد قیمت گذاری اختیار تعدیلی با دیرش، مدیریت دارایی و تامین مالی، سال چهارم، شماره 1 (پیاپی 12).


• جعفری، سیده محبوبه؛ احمدوند، میثم (1394). رتبه بندی اعتباری شرکت های پذیرفته شده در بورس اوراق بهادار تهران با استفاده از رویکرد امتیاز بازار نوظهور، پژوهشنامه اقتصاد و کسب و کار، سال ششم، شماره 10، 56-37.


• عیسی زاده، سعید؛ عریانی، بهاره (1389). رتبه بندی مشتریان حقوقی بانک ها برحسب ریسک اعتباری به روش تحلیل پوششی داده‌ها: مطالعه موردی شعب بانک کشاورزی، فصلنامه پژوهش ها و سیاست های اقتصادی، دوره 18، شماره 55، 59-86.


• کرباسی یزدی، حسین؛ فتحی هفشجانی، کیامرث؛ امین زاده، سمیه (1390). رتبه بندی شرکت های سهامی عام تابعه ایران خودرو با استفاده از الگوی TOPSIS، پژوهش های حسابداری مالی و حسابرسی، شماره 9، 166-139.


• محمودآبادی، حمید؛ غیوری مقدم، علی (1390). رتبه بندی اعتباری از لحاظ توان مالی پرداخت اصل و فرع بدهیها با استفاده از شیوه تحلیل پوششی داده ها، دانش حسابداری، دوره 2، شماره 4، 143-125.


• مشایخ، شهناز؛ شاهرخی، سیده سمانه (1395). شناسایی شاخصهای تعیین کننده رتبه اعتباری شرکتها، دانش سرمایه‌گذاری، دوره 5، شماره 19، 52-25.


• Ali, A., Zhang, W., (2008). Proximity to Broad Credit Rating Change and Conservatism in Reported Earnings. University of Texas at Dallas Working Paper.


• Behr, P, Gnttler, A, (2008). The informational content of unsolicited ratings. J. Bank. Financ. 32 (, 4), 587–599.


• Blomkvist M. , Loflund A., Vyas H., (2020). Credit ratings and firm life-cycle, Finance Research Letters (2020), doi: https://doi.org/10.1016/j.frl.2020.101598


• Boyd B., Bergh D., Ketchen Jr D., (2010). Reconsidering the reputation–performance relationship: a resource-based view, Journal of Management, 36, 508-609.


• Cantor, R., (2004). An introduction to recent research on credit ratings. J. Bank. Financ. 28, 2565–2573.


• Coad A., Segarra, A., Teruel, M., (2016). Innovation and firm growth: Does firm age play a role?, Research Policy, 45, 387-400.


• Diamond D., (1991). Monitoring and reputation: the choice between bank and directly placed debt, Journal of Political Economy, 99, 688-721.


• Dichev, I.D., Piotroski, J.D., (2001). The long-run stock returns following bond ratings changes. J. Financ. 56, 173–204.


• Faff R., Kwok W., Podolski E, Wong G., (2016). Do corporate policies follow a life-cycle?, Journal of Banking and Finance, 69, 95-107.


• Flynn, S., Ghent, A. (2018). Competition and credit ratings after the fall. Manag. Sci. 64 (4), 1477–1973.


• Hand, J.R.M., Holthausen, R.W., Leftwich, R.W., (1992). The effect of bond rating agency announcements on bond and stock prices. J. Financ. 47, 733–752.


• Harford J., Uysal V., (2014). Bond market access and investment, Journal of Financial Economics, 112, 147-163.


• Hasan M., Cheung A., (2018). Organization capital and firm life cycle, Journal of Corporate Finance, 48, 556-578.


• Hasan M., Habib A., (2017). Firm life cycle and idiosyncratic volatility, International Review of Financal Analysis, 50, 164-175.


• Holthausen, R.W., Leftwich, R.W., 1986. The effect of bond rating changes on common stock prices. J. Financ. Econ. 17, 57–89.


• Jiang, X., and F. Packer. (2017). Credit ratings of domestic and global agencies: what drives the differences in China and how are they priced?BIS Working Papers No. 648. Available at: https://www.bis.org/publ/work648.htm .


• Joe, D.Y. , Oh, F.D. , (2017). Did foreign ownership of Korean credit rating agencies im- prove their ratings? Contemp. Econ. Policy 35 (1), 193–200 .


• Kedia, S., Rajgopal, S., Zhou, X., (2017). Large shareholders and credit ratings. J. Financ. Econ. 124 (3), 632–653 .


• Kemper, k.J., (2020). Financial adjustments and credit rating changes, journal of Finance Research Letters, article in press.


• Khieu, H.D., Pyles, M.K., (2012). The influence of a credit rating change on corporate cash holdings and their marginal value. Financ. Rev. 47 (2), 351–373.


• Kisgen, D.J., (2006). Credit ratings and capital structure. J. Financ. 61, 1035–1072.


• Miller D., Friesen P., (1984). A longitudinal study of corporate life-cycle, Management Science, 30, 1161-1183.


• Porter M., (2004). Competitive strategy: techniques for analyzing industries and competitors, First edition.


• Wojewodzki, M., Poon, W.P.H and Shen, S., The Role of Credit Ratings on Capital Structure and Its Speed of Adjustment: An International Study, European Journal of Finance, 24(9), 735-760.