Cost uniqueness and corporate credit rating

S M Zahid, Mohammad Nazrul Islam and Ling Zhou

Finance Research Letters, 2025, vol. 76, issue C

Abstract: In this study, we examine the association between cost uniqueness and corporate credit rating. Firms with high cost uniqueness suffer from greater information uncertainty and agency conflicts, potentially reducing their creditworthiness. On the other hand, greater cost uniqueness could indicate an enhanced competitive position, which leads to higher profit margins, stronger financial performance, and improved creditworthiness. Using U.S. corporate data, we find that cost uniqueness and credit rating are negatively associated. Our results remain robust across various fixed effects, matched sample analysis, and other efforts to address endogeneity concerns.

Keywords: Cost uniqueness; Credit rating; Information uncertainty; Information asymmetry; Agency conflicts (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:76:y:2025:i:c:s1544612325002284

DOI: 10.1016/j.frl.2025.106964

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