Stock Ownership Guidelines and Corporate Credit Ratings

Khaled A. Abdulsalam, Saud A. Althaqeb () and Yahya B. Abdullah ()
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Khaled A. Abdulsalam: College of Business Administration, Kuwait University, P.O Box 17140 Khaldiyah 74252, Sabah Al Salem University City, Kuwait
Saud A. Althaqeb: College of Business Administration, Kuwait University, P.O Box 17140 Khaldiyah 74252, Sabah Al Salem University City, Kuwait
Yahya B. Abdullah: College of Business Administration, Kuwait University, P.O Box 17140 Khaldiyah 74252, Sabah Al Salem University City, Kuwait

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2025, vol. 28, issue 02, 1-37

Abstract: This paper investigates the influence of stock ownership guidelines on credit ratings for a sample of US firms. We document a positive association between CEO stock ownership guidelines and long-term credit ratings, suggesting that ownership guidelines reduce agency conflicts and lead to more favorable credit assessments. Further, we find that our results are more pronounced among firms operating in competitive markets. Our results are robust to alternative regression specifications and different measures of credit ratings. Our findings reveal that management stock ownership guidelines serve as a non-financial determinant of credit ratings, adding a new dimension to understanding corporate governance applications.

Keywords: Corporate governance; credit ratings; stock ownership guidelines; agency theory; non-financial determinant; managerial ownership (search for similar items in EconPapers)
JEL-codes: G30 G34 J33 L14 L22 M12 M41 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1142/S0219091525500067

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