How are the Firms’ Innovative Activities and Credit Rating Signals Received in the Market?

Firm innovativeness and financing capacity are critical signals to stakeholders as they are key drivers of firm performance and competitiveness and indicate the firm's ability to fund its operations and growth initiatives. Based on signaling theory, this study investigates the signaling effect...

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Bibliographic Details
Published inAsia Marketing Journal (Online) Vol. 25; no. 1; pp. 37 - 44
Main Author Whang, Jeongbin
Format Journal Article
LanguageEnglish
Published 한국마케팅학회AMJ 01.01.2023
Korean Marketing Association
Subjects
creditworthiness
non-technologicalinnovation
signalingtheory
technologicalinnovation
Creditworthiness
Technological innovation
Non-technological innovation
Signaling theory
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Summary:Firm innovativeness and financing capacity are critical signals to stakeholders as they are key drivers of firm performance and competitiveness and indicate the firm's ability to fund its operations and growth initiatives. Based on signaling theory, this study investigates the signaling effect of a firm's innovativeness and creditworthiness and examines its signaling effectiveness. Using Korean innovation data and Korea Investors Service financial data for nine years, the findings indicate that a firm's technological innovation has a negative impact on its credit ratings, while non-technological innovation has a positive impact. Furthermore, a firm's credit ratings positively impact its performance. The current study contributes to the literature on signaling theory by exploring the signaling effect of a firm's innovativeness and creditworthiness. The findings provide insights for managers on how to send and monitor signals to stakeholders.
ISSN:1598-7868
2765-6500
2765-6500
DOI:10.53728/2765-6500.1606