Does Managerial Education Matter for Credit Risk? Evidence from Taiwan

This paper tests how managerial educational level (MEL) determines corporate credit risk (CCR) using a sample of listed Taiwanese firms from 2006 to 2018. Results indicate that controlling for a variety of firm fundamentals and corporate governance effects, a higher MEL is itself associated with a higher credit rating score (i.e., a lower CCR). Such a negative MEL-CCR association is more evident for firms operating in low-competition or monopolistic industries. The overall results are supported by relevant hypotheses associated with MEL, i.e., the productivity-related human capital hypothesis, knowledge-related earnings quality hypothesis, and reputation-related organizational legitimacy hypothesis.