The Influence of Internationalization on Credit Ratings: an Analysis of Brazilian Companies
DOI:
https://doi.org/10.5007/2175-8077.2023.e70312Keywords:
Credit rating, risk, internationalization, ordered choice modelsAbstract
The objective of the present study was to analyze the relationship between internationalization and credit rating of Brazilian companies. The data were obtained from a banking institution that periodically rates its customers according to risk. An ordered probit model was constructed. The constructed model used the risk rating as the dependent variable and financial variables were used as predictors. The variable of interest, internationalization, measured by exports and imports, was statistically significant, indicating that companies with international activities are more likely to have a better risk rating, that is, they pose less risk to banking institutions in relation to obtaining bank credit.
References
ABIYEV, R. H. Credit Rating Using Type-2 Fuzzy Neural Networks. Mathematical Problems in Engineering, p. 8- 16, 2014. https://doi.org/10.1155/2014/460916
AKERLOF, G. A. The Market for "Lemons": Quality Uncertainty and the Market Mechanism. The Quarterly Journal of Economics, v. 84, n.3, p. 488-500, 1970. https://doi.org/10.2307/1879431
AL-SAKKA, R.; GWILYM, O. A random effects ordered probit model for rating migrations. Finance Research Letters, v. 7, n. 3, p. 140–147, 2010. https://doi.org/10.1016/j.frl.2010.02.004
ALVES, M. T.; MATIAS, F. J. F. Gestão e divulgação do risco operacional e os acordos de Basileia: o caso dos maiores bancos portugueses. Revista Universo Contábil, n. 10, v.3, p. 172-193, 2014.
AN, H.; CHAN, K. C. Credit ratings and IPO pricing. Journal of Corporate Finance, n. 14, v.5, p. 584-595, 2008. https://doi.org/10.1016/j.jcorpfin.2008.09.010
ARSLAN-AYAYDIN, O.; KARAN, M. B. Credit risks and internationalization of SMEs. Journal of Business Economics and Management, n, 10, v. 4, p. 361-368, 2009. https://doi.org/10.3846/1611-1699.2009.10.361-368
BAKHTIARI, S. Corporate credit ratings: Selection on size or productivity? International Review of Economics and Finance, v. 49, p. 84-101, 2017. https://doi.org/10.1016/j.iref.2017.01.023
BALIOS, D.; THOMADAKIS, S.; TSIPOURI, L. Credit rating model development: an ordered analysis based accounting data. Research in International Business and Finance. v. 38, p. 122-136, 2016. https://doi.org/10.1016/j.ribaf.2016.03.011
BANCO CENTRAL DO BRASIL (BCB). Recomendações de Basileia. 2017. Disponível em: https://www.bcb.gov.br/fis/supervisao/basileia.asp. Acesso em: 25 out. 2018.
BELLOTTI, T.; MATOUSEK, R.; STEWART, C. Are rating agencies’ assignments opaque? Evidence from international banks. Expert Systems with Applications. v. 38, n. 4, p. 4206–4214, 2011. https://doi.org/10.1016/j.eswa.2010.09.085
BRITO, G.; ASSAF NETO, A. Modelo de classificação de risco de crédito de empresas. Revista Contabilidade & Finanças, n. 19, v. 46, p. 18-29, 2008. https://doi.org/10.1590/S1519-70772008000100003
BUCH, C. M.; KOCH, C. T.; KOETTER, M. Should I stay or Should I go? Bank productivity and internationalization decisions. Journal of Banking & Finance. n. 42, p. 266-282, 2014. https://doi.org/10.1016/j.jbankfin.2014.02.003
BUCKLEY, P. J.; CASSON, M. The Future of the Multinational Enterprise. London: Homes & Meier, 1976. https://doi.org/10.1007/978-1-349-02899-3
BUCKLEY, P.; CASSON, M. C. Models of the Multinational Enterprise. Journal of International Business Studies, n. 29, v. 1, p. 21-44, 1988. https://doi.org/10.1057/palgrave.jibs.8490023
BUCKLEY, P.; CASSON, M. Analyzing foreign market entry strategies: extending the internalization approach. Journal of International Business Studies, n. 29, v. 3, p. 539-561, 1998. https://doi.org/10.1057/palgrave.jibs.8490006
BUCKLEY, P.; CHEN, L.; CLEGG. L. J.; VOSS, H. Risk propensity in the foreign direct investment location decision of emerging multinationals. Journal of International Business Studies, v. 49, p. 153–171, 2017. https://doi.org/10.1057/s41267-017-0126-4
CHEN, Chongyang; KIESCHNICK, Robert L. Bank Credit and Corporate Working Capital Management. Journal of Corporate Finance, n. 48, p. 579-596, 2017. https://doi.org/10.1016/j.jcorpfin.2017.12.013
CHETTY, S.; CAMPBELL-HUNT, C. A strategic approach to internationalization: A traditional versus a 'born-global' approach. Journal of International Marketing, v. 12, p. 57-81, 2004. https://doi.org/10.1509/jimk.12.1.57.25651
CHOU, T. K.; CHENG, J. C. Credit ratings and excess value of diversification. Journal of Empirical Finance, v. 19, 266-281, 2012. https://doi.org/10.1016/j.jempfin.2011.12.003
COSTA, P. H. O Novo Acordo de Basiléia e seus Impactos no Papel que as Instituições Financeiras Desempenham nos Ciclos Econômicos. Economia Política Internacional: Análise Estratégica, v. 7, p. 56 - 62, 2007.
DAMASCENO, D. L.; ARTES, R.; MINARDI, A. M. A. F. Determinação de rating de crédito de empresas brasileiras com a utilização de índices contábeis. Revista de Administração da USP, n. 43, v. 4, p. 344-355, 2008.
DRISS, H.; MASSOUD, N.; ROBERTS, G. S. Are credit rating agencies still relevant? Evidence on certification from Moody's credit watches. Journal of Corporate Finance, n. 39, p. 1-23, 2016.
DUNNING, J. H. Trade, location of economic activity and the MNE: A search for an eclectic approach. In B. Ohlin, P. O. Hesselborn, & P. M. Wijkman (Orgs.). The international allocation of economic activity (pp. 395–418). London: Macmillan, 1977. https://doi.org/10.1007/978-1-349-03196-2_38
DUNNING, J. H. The Eclectic Paradigm as an Envelope for Economic and Business Theories of MNE Activity, International Business Review, v. 9, p. 163-190, 2000. https://doi.org/10.1016/S0969-5931(99)00035-9
DURAND, D. Risk Elements in Consumer Installment Financing, 1941. Disponível em: http://www.nber.org/chapters c9265.pdf. Acesso em: 30 set. 2019.
FUDALIŃSKI, J. Risk Taking Propensity and Firm Internationalization Process. Entrepreneurial Business and Economics Review, n. 3, v. 2, p. 85-104, 2015. https://doi.org/10.15678/EBER.2015.030207
GARCÍA, J. C. T.; GARCÍA, M. A. M.; MARTÍNEZ, F. V. Credit risk management at retail in Mexico: An econometric improvement in the selection of variables and changes in their characteristics. Contaduría y Administración, n. 62, p. 399–418, 2017. https://doi.org/10.1016/j.cya.2017.02.006
GONENC, H.; ARSLAN, Ö. Capital Structure of the Turkish Domestic and International Real Sector Firms. Istanbul Stock Exchange Review, n.7, v. 25, p. 41-64, 2003.
GREENE, W. H. Econometrics Analysis. New Jersey: Prentice Hall, 2003.
HUANG, Y-L.; SHEN, C-H. Cross-country variations in capital structure adjustment—The role of credit ratings. International Review of Economics and Finance, v. 39, p. 277-294, 2015. https://doi.org/10.1016/j.iref.2015.04.011
JOHANSON, J.; VAHLNE, J-E. The internationalization process of the firm: a model of knowledge development and increasing foreign commitments. Journal of International Business Studies, n. 8, v. 1, p. 23-32, 1977. https://doi.org/10.1057/palgrave.jibs.8490676
JOHANSON, J.; VAHLNE, J-E. Commitment and opportunity development in the internationalization process: A note on the Uppsala internationalization process model. Management International Review, n. 46, v. 2, p. 165-178, 2006. https://doi.org/10.1007/s11575-006-0043-4
JOHANSON, J.; VAHLNE, J-E. The Uppsala internationalization model revisited – From liability of foreignness to liability of outsidership. Journal of International Business Studies, n. 40, v. 4, p. 1411-1431, 2009. https://doi.org/10.1057/jibs.2009.24
KARAMPATSAS, N.; PETMEZAS, D.; TRAVLOS, N. G. Credit ratings and the choice of payment method in mergers and acquisitions. Journal of Corporate Finance, n. 25, p. 474-493, 2014. https://doi.org/10.1016/j.jcorpfin.2014.01.008
KISER, E.; PRAGER, R.; SCOTT, J. Supervisor ratings and the contraction of bank lending to small businesses. Journal of Financial Services Research, n. 50, v. 2, p. 163-186, 2012. https://doi.org/10.1007/s10693-015-0226-x
KNIGHT, G.; CAVUSGIL, S. T. Innovation, Organizational Capabilities. the Born-global Firm. Journal of International Business Studies, v. 35, n. 2, p. 124-141, 2004. https://doi.org/10.1057/palgrave.jibs.8400071
KUBÍCKOVÁ, L.; TOULOVÁ, M. Risk factors in the internationalization process of SMEs. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, n. LXI, v. 7, p. 2385–2392, 2013. https://doi.org/10.11118/actaun201361072385
LI, H.; LIN, Y.; LIANG, C. Internationalization and credit risk: Evidence from Chinese listed firms. Emerging Markets Review, n. 44, p. 1-16, 2020.
LIVINGSTON, M.; POON, W. P. H.; ZHOU, L. Are Chinese credit ratings relevant? A study of the Chinese bond market and credit rating industry. Journal of Banking and Finance, n. 87, p. 216-232, 2018. https://doi.org/10.1016/j.jbankfin.2017.09.020
MAIA, P. M. C. O impacto de Basileia III sobre a economia. Faculdade de Economia da Universidade do Porto. 2010. Disponível em: http://www.ordemeconomistas.pt/xportalv3/file/XEOCM. Acesso em: 30 out. 2018.
MALLICK, D. Marginal and interaction effects in ordered response models. MPRA Paper No. 9617, University of Munich. 2009. Disponível em: https://mpra.ub.uni-muenchen.de/13325/1/MPRA_paper_13325.pdf. Acesso em: 25 out. 2018.
PAUL, J.; ROSADO-SERRANO, Alexander. Gradual internationalization vs born-global/international new venture models: A review and research agenda. International Marketing Review, v. 36, n. 6, p. 830-858, 2019. https://doi.org/10.1108/IMR-10-2018-0280
RAMOS, A.; SIMÕES, M. Credit Rating Agencies, Finance and Growth, ch. 10, p. 192–207 in TEIXEIRA, Paulino; DUARTE, António Portugal; REDZEPAGIC, Srdjan; ERIC, Dejan. European Integration Process in Western Balkan Countries. Institute of Economic Sciences. V. 1. 2012.
RASK, M.; STRANDSKOV, J.; HÅKONSSON, D. D. Theoretical Perspectives on the Internationalization of Firms, Journal of Teaching in International Business, n. 19, v. 4, p. 320-345, 2008. https://doi.org/10.1080/08975930802427502
REBOLLEDO, R.; CARO, N.; ALARCÓN, A. Internationalization and credit risk of firms in emerging markets. Journal of Business Research, n. 104, p. 132-142, 2019.
REID, S. D. Firm internationalization, transaction costs, and strategic behaviour. International Marketing Review, n 1, v. 2, p. 45–56, 1983. https://doi.org/10.1108/eb008251
ROMMER, A. D. Testing the Assumptions of Credit-scoring Models. Accounting-based Credit-scoring models: Econometric Investigations. 2005. Disponível em: https://www.nationalbanken.dk/da/publikationer/Documents/2005/06/phd_samlet.pdf. Acesso em: 16 set. 2019.
SAMII, M.; ALIOUCHE, E. H.; WRIGHT, R. Mitigating risks in internationalization decisions: the choice of the optimal entry mode. 2008. Disponível em: https://pdfs.semanticscholar.org/e8ec/e5dd0afee5c4c0486a0460bbeea2ed15ac66.pdf. Acesso em: 10 nov. 2019.
SHEN, C-H.; HUANG, Y-L.; HASAN, I. Asymmetric benchmarking in banc credit rating. Journal of International Financial Markets, Institutions & Money, n. 22, p. 171-193, 2012. https://doi.org/10.1016/j.intfin.2011.08.004
S&P. Guide to credit rating essentials: What are credit ratings and how do they work? Standards and Poor’s. 2014. Disponível em: https://www.spratings.com/documents/20184/760102/SPRS_Understanding-Ratings_GRE.pdf/298e606f-ce5b-4ece-9076-66810cd9b6aa. Acesso em: 12 nov. 2019.
TAO, Q.; XU, X.; LIU, Y. The effect of internationalization on credit risk: The moderating role of firm and industry characteristics. Finance Research Letters, 38, 101804, 2021.
TUZOVÁ, M.; TOULOVÁ, M.; STRAKA, J.; KUBÍCKOVÁ, L. Can Uppsala Model Explain the Internationalisation of Central European SMEs? European Journal of Business Science and Technology, n. 1, v. 2, p. 149–164, 2015. https://doi.org/10.11118/ejobsat.v1i2.14
VERNON, R. International Investment and International Trade in the Product Cycle. The Quarterly Journal of Economics, n. 80, v. 2, p. 190-207, 1966. https://doi.org/10.2307/1880689
WELCH, C.; WELCH, L. S. Broadening the concept of international entrepreneurship: internationalization, networks and politics. Journal of International Entrepreneurship, n. 2, v. 3, p. 217-237, 2004. https://doi.org/10.1023/B:JIEN.0000032774.01082.41
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Revista de Ciências da Administração
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
The author must ensure:
- that there is complete consensus among all co-authors to approve the final version of the paper and its submission for publication.
- that their work is original, and if the work and/or words of others have been used, these have been duly acknowledged.
Plagiarism in all its forms constitutes unethical publishing behavior and is unacceptable. RCA reserves the right to use software or any other methods of plagiarism detection.
All submissions received for evaluation in the RCA journal are screened for plagiarism and self-plagiarism. Plagiarism identified in manuscripts during the evaluation process will result in the submission being archived. In the event of plagiarism being identified in a manuscript published in the journal, the Editor-in-Chief will conduct a preliminary investigation and, if necessary, retract it.
Authors grant RCA exclusive rights of first publication, with the work simultaneously licensed under the Creative Commons (CC BY) 4.0 International License.
Authors are authorized to enter into separate, additional contractual arrangements for the non-exclusive distribution of the version of the work published in this journal (e.g., publishing in an institutional repository, on a personal website, publishing a translation, or as a chapter in a book), with an acknowledgement of its authorship and initial publication in this journal.
This license grants any user the right to:
Share – copy, download, print, or redistribute the material in any medium or format.
Adapt – remix, transform, and build upon the material for any purpose, even commercially.
According to the following terms:
Attribution – You must give appropriate credit (cite and reference), provide a link to the license, and indicate if changes were made. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use.
No additional restrictions – You may not apply legal terms or technological measures that legally restrict others from doing anything the license permits.
