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Stock Ownership Guidelines and Corporate Credit Ratings

Author

Listed:
  • 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)

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.

Suggested Citation

  • Khaled A. Abdulsalam & Saud A. Althaqeb & Yahya B. Abdullah, 2025. "Stock Ownership Guidelines and Corporate Credit Ratings," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 28(02), pages 1-37, June.
    • Handle: RePEc:wsi:rpbfmp:v:28:y:2025:i:02:n:s0219091525500067
    DOI: 10.1142/S0219091525500067
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    More about this item

    Keywords

    Corporate governance; credit ratings; stock ownership guidelines; agency theory; non-financial determinant; managerial ownership;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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