Marc Simpson and Axel Grossmann
To determine the effect that covenants have on the credit ratings assigned by the two major agencies.
Abstract
Purpose
To determine the effect that covenants have on the credit ratings assigned by the two major agencies.
Design/methodology/approach
The authors examine 1,822 bond issues from 1991 to 2018, with a two-stage methodology to account for the endogeneity of the firms' choices and the ordinal nature of the ratings. The authors use Hendry's model selection method to find the best-fitting models from 37 control variables; the final models feature 20–24 orthogonalized variables, all significant at 5% and most at 1%.
Findings
The study’s results suggest that restrictive covenants positively affect ratings, particularly for bonds on the border of junk and investment grade. However, this effect appears to be decreasing with time, suggesting the financial crisis of 2008 has impacted ratings. Additionally, divergent covenant treatment leads to split ratings where the two agencies assign different levels of ratings on the same bonds. The study’s findings provide key insights into the factors that differentiate ratings given by each agency.
Practical implications
Managers must balance the perceived benefits of covenants against the costs, included lower credit ratings.
Originality/value
No other study has examined this issue controlling for both the ordinal nature of the ratings and the endogeneity in the decision to include specific covenants.
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The burden social theorists must be willing to accept, respond to, and act upon pertains to the difficulties that predictably accompany all efforts to convey to nontheorists the…
Abstract
The burden social theorists must be willing to accept, respond to, and act upon pertains to the difficulties that predictably accompany all efforts to convey to nontheorists the unwelcome fact of heteronomy – that as actors, we are not as autonomous as we were told and prefer to assume – and to spell out what heteronomy in the form in which it has been shaping the developmental trajectory of modern societies means for professional theorists. I introduce the concept of “vitacide,” designed to capture that termination of life is a potential vanishing point of the heteronomous processes that have been shaping modern societies continuing to accelerate and intensify in ways that prefigure our future, but not on our human or social terms. Heteronomy pointing toward vitacide should compel us as social theorists to consider critically both the constructive and destructive trajectory that social change appears to have been following for more than two centuries, irrespective of whether the resulting prospect is to our liking or not. In this context, the classical critical theorists of the early Frankfurt School, especially Max Horkheimer and Theodor W. Adorno, pursued what turned out to be an evolving interest in rackets, the authoritarian personality, and the administered society – concepts that served as foils for delineating the kind of theoretical stance that is becoming more and more important as we are moving into an increasingly uncertain future.
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Marcus Fischer, Florian Imgrund, Christian Janiesch and Axel Winkelmann
Digital transformation has been changing the economic environment of enterprises in recent years. To remain competitive, they rely on an extensible software architecture, flexible…
Abstract
Purpose
Digital transformation has been changing the economic environment of enterprises in recent years. To remain competitive, they rely on an extensible software architecture, flexible workflow execution, and automated decision management. The concepts of service-oriented architectures (SOA), business process management (BPM), and business rules management (BRM) provide an adequate, yet isolated means of addressing many of these requirements. The paper aims to discuss these issues.
Design/methodology/approach
This study adapts from established research frameworks to structure the current state of research on the integration of SOA, BPM and BRM. The authors highlight the current research scope, point to disregarded topics and sketch out multidisciplinary research approaches.
Findings
While the three concepts are often discussed only in isolation or pairwise, approaches that integrate them are scarce. Against this backdrop, this study defines three types of research opportunities and identifies several directions for future research that should be explored from a technological as well as organizational perspective. Given the breadth of open questions, the authors present sources for each area of our research framework, which can serve as starting points for future investigations.
Practical implications
Except for well-established support for separate tasks and technologies, there is a lack of integrated standards, methods and platforms, which for example enable integrated decision-making across BPM and SOA.
Originality/value
Our contribution builds on established frameworks and clearly shows that the discussion on the integration of SOA, BPM and BRM cannot yet be regarded as sufficient. The research agenda highlights which areas explicitly benefit from a more precise consideration.