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Labor investment efficiency and credit ratings

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  • Habib, Ahsan
  • Ranasinghe, Dinithi

Abstract

We examine the relationship between labor investment efficiency and credit ratings. Using a sample of U.S. firm spanning the period 1987 to 2016, we document that inefficient labor investment decreases firm credit ratings. Our results remain robust to possible endogeneity concerns. We also document that financial distress, earnings volatility, and firm life cycle moderate the relationship between inefficient labor investments and credit ratings.

Suggested Citation

  • Habib, Ahsan & Ranasinghe, Dinithi, 2022. "Labor investment efficiency and credit ratings," Finance Research Letters, Elsevier, vol. 48(C).
    • Handle: RePEc:eee:finlet:v:48:y:2022:i:c:s154461232200191x
    DOI: 10.1016/j.frl.2022.102924
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    Cited by:

    1. Habib, Ahsan & Ranasinghe, Dinithi, 2022. "Asset redeployability and credit ratings," Finance Research Letters, Elsevier, vol. 50(C).
    2. Panta, Humnath & Narayanasamy, Arun & Panta, Ayush, 2023. "Organizational capital and credit ratings," Finance Research Letters, Elsevier, vol. 57(C).
    3. Huang, Xinhui & Tarkom, Augustine, 2022. "Labor investment efficiency and cash flow volatility," Finance Research Letters, Elsevier, vol. 50(C).
    4. Liu, Xiujuan & Zhang, Shengnan, 2024. "The impact of credit risk on labor investment efficiency," Finance Research Letters, Elsevier, vol. 61(C).

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