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Does Managerial Education Matter for Credit Risk? Evidence from Taiwan

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  • Nguyen, Thi Bao Ngoc
  • Lin, Li-Feng
  • Su, Xuan-Qi
  • Yu, Jui-Hung

Abstract

This paper tests how managerial educational level (MEL) determines corporate credit risk (CCR) using a sample of listed Taiwanese firms from 2006 to 2018. Results indicate that controlling for a variety of firm fundamentals and corporate governance effects, a higher MEL is itself associated with a higher credit rating score (i.e., a lower CCR). Such a negative MEL–CCR association is more evident for firms operating in low-competition or monopolistic industries. The overall results are supported by relevant hypotheses associated with MEL, i.e., the productivity-related human capital hypothesis, knowledge-related earnings quality hypothesis, and reputation-related organizational legitimacy hypothesis.

Suggested Citation

  • Nguyen, Thi Bao Ngoc & Lin, Li-Feng & Su, Xuan-Qi & Yu, Jui-Hung, 2021. "Does Managerial Education Matter for Credit Risk? Evidence from Taiwan," Finance Research Letters, Elsevier, vol. 41(C).
    • Handle: RePEc:eee:finlet:v:41:y:2021:i:c:s1544612320316263
    DOI: 10.1016/j.frl.2020.101812
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    More about this item

    Keywords

    Managerial Education; Corporate Credit Risk; Corporate Governance; Industry Competition;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development

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