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Single Notch Versus Multi Notch Credit Rating Changes and the Business Cycle
No full textIssuers’ credit ratings change by one or more notches when credit rating agencies provide new ratings. Unique to the literature, I study the influences affecting multi notch versus single notch rating upgrades and downgrades. For Standard & Poors data, I show that rating changes with multiple notches provide more information to the market than single notch rating changes. Consistent with prior literature on the business cycle, I show that investors value good news rating changes (upgrades) more in bad times (recession) and that investors value bad news rating changes (downgrades) more in good times (expansion).
I model and test probit models using variables capturing the characteristics of the previous issuer’s credit rating, liquidity, solvency, profitability, and growth opportunity to determine the classification of single notch versus multi notch rating changes. The determinants of multi notch versus single notch rating changes for upgrades and downgrades differ. Business cycle influences are evident.
Firms that have multi notch rating upgrades and downgrades have significantly different probit variables vis-à-vis firms that have single notch rating upgrades and downgrades. The important characteristics for determining multiple notch upgrades are a firm’s prior rating change, prior rating, cash flow, total assets and market value. The important characteristics for determining multiple notch downgrades are a firm’s prior rating change, prior rating, current ratio, interest coverage, total debt, operating margin, market to book ratio, capital expenditure, total assets, market value, and market beta. The variables that differ for multi notch upgrades in recessions are cash flow, net income, operating margin, market to book ratio, total assets, and retained earnings. The variables that differ for multi notch downgrades in expansions are a firm’s prior rating change, current ratio, interest coverage ratio, debt ratio, total debt, capital expenditure and market beta.
The power of the explanatory tests improves when the stage of the business cycle is considered. Results are robust to consideration of rating changes across rating categories, changes from probit to logit, alternative specifications of accounting variables, lags and leads of recessions and expansions timing, Fama and French industry adjustments, and winsorization levels of variables
A Re-Examination of Increasing Cash Holdings
No full textWe reexamine the widely accepted phenomenon that U.S. corporations are holding increasing amount of cash in the last few decades. We document that increase in cash holdings (scaled by the market value of assets) is a smaller and narrower phenomenon. We find that the average amount of cash holdings went up from 9.6% during the period 1980-84 to 11.1% during 2010-14. We also find that most of the increase in cash holdings can be attributed to smaller firms and firms in only two sectors, namely, healthcare, and hitech sectors. Finally, we also document that this phenomenon of an increase in cash holding for the healthcare and hi-tech sectors is not random but spans the entire period in our sample
The Altman ‘Z’ is “50” and Still Young: Bankruptcy Prediction and Stock Market Reaction due to Sudden Exogenous Shock
No full textThis study is motivated by the continuing popularity of the Altman Z-score as a measure of distress risk. This study provides a hitherto unexplored perspective by examining the relation between stock market returns and the probability of bankruptcy during an unexpected sudden shock. Following the 9/11 attacks of 2001, the US stock market dropped dramatically. We find evidence that firms which had higher bankruptcy risk experienced greater negative returns following the attack. This study suggests that the Altman Z-score is useful in identifying firms with a higher distress risk and consequent larger negative stock returns in the event of an exogenous sudden shock
Cash Savings in Dual Class Firms
No full textWe investigate the relation between the utilization of dual-class shares and the cash flow sensitivity of cash. Dual-class share structures are on the rise and are frequently used as an indicator of governance quality. Almeida, Campello, and Weisbach (2004) measure the cash flow sensitivity of cash as a gauge of savings from current-period cash flow. Our study contributes to both corporate governance and cash management domains by comparing the cash savings practices of dual-class share companies with those of single-class share companies. We discover that dual-class firms exhibit a higher cash flow sensitivity of cash, indicating that they tend to accumulate more cash from their cash flows
Does Competition Make Businesses Resilient?
No full textThis study investigates the relation between industry-level competition and the stock market's response to an exogenous shock. Specifically, we utilize the stock market's reaction to the terrorist attacks on September 11, 2001, which caused a significant market decline. Our findings reveal that firms operating in highly concentrated industries (lower competition), as measured by the Herfindahl index, experienced more pronounced negative returns following the attacks. Therefore, firms in less competitive fields may not be prepared for the unexpected. These results support the notion that competition bolsters business resilience to shocks and underscore the importance for investors to consider product market structures when evaluating firm performance
Social determinants of the mental health of pregnant women in Nepal: Stakeholder perspectives.
No full textWomen during pregnancy are at a greater risk of experiencing poor mental health, which is one of the major global public health issues, and more so in many developing countries like Nepal, but limited evidence of research on this topic is evident. In this paper, we are focused on exploring the social determinants of the mental health of pregnant women in Nepal from the stakeholder perspectives. This paper utilises eight stakeholder perspectives collected through open-ended in-depth interviews. All the interviews were analysed thematically using an inductive approach. This paper presents three major findings: Inadequate social support, Limited availability and accessibility of maternal health services, and Restricted socioeconomic and cultural context. The inadequate social support from family/relatives, neighbours, community and national policies such as maternity leave, alongside the absence of NGOs/INGOs support, put women at risk of poor mental health. In addition to the inadequate support, limited availability and accessibility of maternal health services potentially cause immense distress among pregnant women. Furthermore, in the context of a patriarchal society, the impact of socioeconomic and cultural context on pregnant women's mental health is also presented as a major determinant of poor mental health among pregnant women. Based on the findings, we conclude that pregnant women are at risk of poor mental health experiences in Nepal and recommend that promoting mental health among pregnant women needs a multifaceted approach that should be considered in all the policies and practices involved in promoting the mental health of pregnant women. [Abstract copyright: Copyright: © 2024 Sah et al. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
The impact of social determinants on health outcomes in a region in the North of England: a structural equation modelling analysis
No full textObjectives: To identify the impact of social determinants of health on physical and mental health outcomes in a UK population.
Study design: Structural equation modelling was used to hypothesise a model of relationships between health determinants and outcomes within a region in the North of England using large-scale population survey data (6,208 responses).
Methods: We analysed responses from a population survey to assess the influence of a deprivation-based index at the environmental level, education, and income on a behaviour
index (smoking, alcohol consumption, physical activity and dietary habits) and the influence of all these factors on self-reported physical health and the influence of the behaviour index and income on mental wellbeing.
Results: The proposed model was well supported by the data. Goodness-of-fit statistics, most notably a low value of the root mean square error of approximation (RMSEA), supported the validity of the proposed relationships (RMSEA=0.054). The model revealed all examined paths to be statistically significant. Income and education were influential in determining an individual's behaviour index score, which, with income, was the most important predictor of both the correlated outcomes of physical health and mental wellbeing (p<0.001 in all cases).
Conclusions: Findings challenge the traditional view of singular causal pathways, emphasising that interventions should consider the underlying influencing socio-economic conditions which would influence behaviour, and therefore physical and mental wellbeing. The extent to which the model is supported by the data, and statistical significance of individual relationships accentuates the imperative for comprehensive public health strategies that integrate multiple socio-economic factors
Prevalence and determinants of intention to use modern contraceptives among grand-multiparous women in sub-Saharan Africa.
No full textSub-Saharan Africa, characterised by high fertility and low contraceptive use prevalence, remains one of the settings with the poorest maternal and child health indices globally. Studies have established that grand-multiparous women are at increased risk of these adverse maternal health outcomes, and contraceptive use is important to averting these adverse outcomes. Thus, this study examines the prevalence and determinants of intention to use modern contraceptives among grand-multiparous women in 10 sub-Saharan African countries with high fertility rates. The study utilized data from the last installments of the Demographic and Health Survey from the 10 leading countries with the highest total fertility rates in sub-Saharan Africa. These countries include: Angola, Benin, Burundi, Chad, Cote d'Ivoire, the Republic of the Congo, Democratic Republic of Congo, Mali, Niger, and Nigeria. Data analysis of 23,500 grand-multiparous women was done at three univariate levels involving a frequency table and bar chart. We employed bivariate logit and multivariate logit regression at the bivariate and multivariate levels to achieve the study objectives. A significant level was determined at p < 0.05. Our study found that less than 40% of grand-multiparous women in these high fertility countries in sub-Saharan Africa, have the intention to use modern contraceptives (39%), but country variations exist with as low as 32.8% in Angola to as high as 71.2% in the Republic of the Congo. The study found that modern contraceptives use intention among grand-multiparous women in these high fertility countries was predicted by a history of contraceptive use and pregnancy termination, exposure to family planning messages on social media, and knowledge of family planning methods. Others were women's fertility planning status, ideal family size, number of marriages (remarriage), couple's fertility desire, current age, and level of education. In the high fertility context of sub-Saharan Africa, characterized by low contraceptive use, improving contraceptive use intention among grand-multiparous women is vital for preventing adverse maternal and child health outcomes, including mortality, resulting from a high-risk pregnancy. Hence, interventions should be more innovative in targeting this group of women to increase the contraceptive prevalence rate in line with Family Planning 2030 goals, and ultimately reduce high fertility rates in the region. [Abstract copyright: © 2022. The Author(s).
