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The relationship between board characteristics and corporate credit ratings—Evidence based on the Chinese market

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  • Zhao, Yuhan
  • Zhang, Yaqi
  • He, Pinglin

Abstract

Credit ratings serve as a critical mechanism for investors to assess corporate credit risk and mitigate investment risk, while a well-managed board is central to addressing principal-agent problems and thereby effectively reducing a firm's default risk. However, research on the impact of board characteristics on credit ratings rarely focuses on individual characteristics. This study focuses on board composition, board member quality, board motivation, and board governance to provide a more comprehensive description of the impact of board characteristics on corporate credit ratings. Using data on Chinese A-share listed companies from 2010 to 2020, the findings are as follows.(1)Board composition, quality, motivation and leadership have a significant impact on corporate credit ratings. (2)Board characteristics affect corporate credit ratings by influencing internal control, surplus management, and accounting disclosure quality. (3)Under the socialist economy with Chinese characteristics, the influence of board characteristics on corporate credit ratings is significantly higher in regions with higher levels of marketization. Overall, our findings provide new insights into the effect of board characteristics on credit ratings.

Suggested Citation

  • Zhao, Yuhan & Zhang, Yaqi & He, Pinglin, 2025. "The relationship between board characteristics and corporate credit ratings—Evidence based on the Chinese market," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 292-316.
    • Handle: RePEc:eee:ecanpo:v:85:y:2025:i:c:p:292-316
    DOI: 10.1016/j.eap.2024.11.023
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