Does geography matter in a geographically small and culturally homogeneous country? Firm location and corporate credit risk

Tsung-Kang Chen

International Review of Economics & Finance, 2016, vol. 44, issue C, 323-348

Abstract: This study explores whether or not the geography characteristics of a firm's headquarters location affect the firm's credit risk in a geographically small and culturally homogeneous country by employing firm location data in Taiwan from the year 2005 to 2011. Empirical results of this study show that rural firms have higher credit risk than urban firms. In addition, the firm location effect is mainly through the channels of incomplete information and financial leverage. Moreover, the study also finds that a firm's market-debt financing distance is positively associated with its credit risk while the firm's banking-debt financing distance has insignificant effect.

Keywords: Firm location; Credit risk; Geographically small country (Taiwan); Financing distance; Structural form credit models (search for similar items in EconPapers)
JEL-codes: G30 G32 G39 R10 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:44:y:2016:i:c:p:323-348

DOI: 10.1016/j.iref.2016.02.007

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