Providing a Credit Rating Model Based on the Optimal level of Corporate Social Responsibility with Particle Aggregation Approach

Document Type : Original Article

Authors

1 PhD student, Finance - Financial Engineering, Department of Finance and Accounting, Faculty of Management and Economics, Science and Research Unit, Islamic Azad University, Tehran, Iran

2 Associate Professor, Department of Accounting, Central Tehran Branch, Islamic Azad University, Visiting Faculty of Management and Economics, Science and Research Unit, Islamic Azad University, Tehran, Iran

3 Associate Professor, Department of Accounting, Central Tehran Branch, Islamic Azad University, Tehran, Iran

Abstract

Companies are usually considered socially responsible when they voluntarily take actions that benefit not only their shareholders, but also broader groups of stakeholders as well as society at large. Firm that integrate various stakeholders’ interests in their business operations make better investments resulting in higher shareholder wealth and corporate value.Therefore, if a company is socially responsible, it benefits from superior chances, better execution, loyalty of stakeholders and better credit offers. Accordingly, if social responsibility activities are beneficial to the company, such a positive effect should be seen favorably by credit rating agencies. Therefore, this article aims to determine the optimal amount of social responsibility at different levels of credit rating in a sample of 101 companies admitted to the Tehran Stock Exchange For this purpose, first, using the emerging market score model, the credit rating of the investigated companies was calculated. In the next stage, companies with credit ratings were divided into three parts (health zone, doubt zone and helpless zone). Then, the research questions were analyzed using the particle aggregation optimization algorithm (PSO) in relation to the social responsibility of companies. The optimal results of particle aggregation algorithm indicate that social responsibility has a decisive role in different levels of credit rating in Tehran Stock Exchange. The results of the research clearly showed that the implementation of different aspects of social responsibility can lead to reducing the risk of default and increasing the different levels of credit rating in companies admitted to the Tehran Stock Exchange.

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References

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Budget and Finance Strategic Research
Volume 5, Issue 3 - Serial Number 19
Autumn Quarterly
October 2024
Pages 115-143

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History

  • Receive Date: 30 March 2024
  • Revise Date: 06 June 2024
  • Accept Date: 09 October 2024

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