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Cost uniqueness and corporate credit rating

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  • Zahid, S M
  • Islam, Mohammad Nazrul
  • Zhou, Ling

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.

Suggested Citation

  • Zahid, S M & Islam, Mohammad Nazrul & Zhou, Ling, 2025. "Cost uniqueness and corporate credit rating," Finance Research Letters, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:finlet:v:76:y:2025:i:c:s1544612325002284
    DOI: 10.1016/j.frl.2025.106964
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