경계등급 기업의 경영자 인센티브가 원가행태에 미치는 영향

In this study, we examine whether the management of a firm with borderline credit rating discretionally changes the firm’s cost behavior. The management of a borderline grade may have higher incentives to improve or maintain its credit rating by raising the level of profits to be reported in order to avoid interest rate fluctuations or liquidity risk, which can be achieved by altering its cost behavior among others. For our empirical tests of cost behavior differences between the borderline and the non－borderline firms, borderline grade firms are defined as follows：(1) firms near a broad credit rating upgrade or downgrade (i.e., firms with (＋) or (－) notch rating) relative to firms not near a rating change, and (2) firms with the borderline grade BBB－ or BB＋ which are the lower bound of the investment grade and the upper bound of the speculative grade, respectively. A sample of 1,862 credit ratings from 2001 to 2016 was analyzed to show that cost stickiness is reduced for firms with borderline grades. More specifically, in both analyses under the two different definitions of the borderline grades, borderline grade firms show less stickiness via higher reduction of discretionary costs relative to non－borderline grade firms, which is consistent with upward profit adjustments due to incentives for better credit ratings. This study focuses on cost behavior in relation to manager’s earnings management incentives in the context of credit rating. It is meaningful to observe the sticky cost behavior itself, but more so to understand how manager’s incentives in credit rating affect the stickiness. In other words, it is shown that manager’s motivation for reporting a higher profit is a factor inversely affecting the degree of cost stickiness by analyzing cost behavior as a phenomenon in which manager’s attempts to obtain a more favorable credit rating can be explicated.