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The impact of international diversification on credit scores: Evidence from the UK

Halabi, H., Alshehabi, A., Wood, G., Afrifa, G.A. (2021) The impact of international diversification on credit scores: Evidence from the UK. International Business Review, . ISSN 0969-5931. (doi:10.1016/j.ibusrev.2021.101856) (Access to this publication is currently restricted. You may be able to access a copy if URLs are provided) (KAR id:87769)

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Abstract

Despite the great deal of previous research into international diversification, we know little about the impact of international diversification on firms’ credit scores. Drawing upon the resource-based view and transaction cost economics, we examine the relationship between international diversification and credit scores by using a large sample of 6,557 UK firms between 2016 and 2017. We find an inverted U-shaped relationship between international diversification and firms’ credit scores, indicating that the effect of international diversification on credit scores is initially positive but becomes negative with over-diversification. In addition, we find that R&D intensity positively moderates the relationship between international diversification and credit score, implying that the credit scores of highly diversified firms improve as they increase their investment in R&D. Further analysis suggests that a firm’s credit score becomes less dependent on international diversification for large firms, firms in concentrated industries, firms in the manufacturing sector, and firms distant from key metropolitan areas, such as London.

Item Type: Article
DOI/Identification number: 10.1016/j.ibusrev.2021.101856
Uncontrolled keywords: International diversification, credit score, innovation, competition, exporting firm, SMEs
Subjects: H Social Sciences > HF Commerce > HF5351 Business
Divisions: Divisions > Kent Business School - Division > Kent Business School (do not use)
Depositing User: Godfred Afrifa
Date Deposited: 26 Apr 2021 18:11 UTC
Last Modified: 15 Jun 2021 12:00 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/87769 (The current URI for this page, for reference purposes)
Afrifa, G.A.: https://orcid.org/0000-0003-3670-8812
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