The Determinants of Credit Ratings: Australian Evidence

Abstract

We examine the impact that various financial and industry variables have on credit ratings issued for Australian firms by Standard and Poor's. Our ordered probit model indicates that interest coverage and leverage ratios have the most pronounced effect on credit ratings. Profitability variables and industry concentration measures are also important. Financial variables are helpful in discriminating between A- and BBB-rated firms, but are less precise in separating AA- and A-rated firms. We also document a consistent trend towards lower ratings—the standard required to achieve a particular rating is increasing over time.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 105 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.