Organizational Capital and Credit Ratings

This study uses pooled OLS to examine the effect of organizational capital on credit ratings using a large sample of US firm data from 1989 to 2017. The main finding reveals that firms with higher organizational capital receive higher credit ratings. This finding is robust to numerous robustness tests, alternative estimation techniques, and attempts to mitigate omitted variable and endogeneity concerns. Further, the positive effect of organizational capital on credit ratings is more prominent when firms are more financially constrained. Overall, our findings reveal the importance of organizational capital in the credit ratings of a firm