Presenting a credit rating model for companies listed on the capital market using the structural equation model

Document Type : Original Article

Authors

1 Master's student in financial management of Imam Hossein University (AS)

2 Assistant professor, Department of Financial Management, Faculty of Management and Economics, Imam Hussien University (AS), Tehran, Iran

3 Professor Assistant of the Department of Financial Management, Faculty of Management and Economics, Imam Hossein University, Tehran, Iran

4 Graduated from the Department of Economics, Allameh Tabatabaei University, Tehran, Iran..

Abstract

Purpose: Credit ratings facilitate decision-making by capital market participants to compare companies in terms of credit risk. This research aimed to identify, weight, and design a credit rating model for companies listed on the capital market for 19 industries.
Method: A qualitative-quantitative approach was used to identify the determinants and design the credit rating model. In the qualitative part, the final indicators were obtained from a study of theoretical literature and then validated with experts. In the quantitative part, structural equations were used to determine the relationships between indicators and components and design the credit rating model.
Findings: By studying theoretical literature and validating with experts, 46 final indicators were identified as factors affecting the credit rating of companies listed on the capital market. By determining the relationships between indicators and components using structural equations, 6 indicators were eliminated and it was determined that the components of liquidity, profitability and growth, social and environmental responsibility, accounting quality and asset quality and company size directly affect the credit rating and the components of industry, market value ratios, leverage ratios, efficiency ratios, audit quality and management quality indirectly and through other components affect the credit rating. The components of liquidity ratios and profitability and growth were the most influential factors on the credit rating of companies with a regression coefficient of 0.574 and 0.352, respectively.

Keywords

Main Subjects

References

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Budget and Finance Strategic Research
Volume 6, Issue 1 - Serial Number 21
Spring Quarterly
April 2025
Pages 77-104

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History

  • Receive Date: 04 December 2024
  • Revise Date: 11 March 2025
  • Accept Date: 20 April 2025

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