Sovereing credit rating and firm specific accounting variables: the impact on rating of European Companies

The aim of this paper is to propose an analysis of the factors which influence the degree of financial quality of European companies, measured by the rating. The sample consists of European firms, excluding Great Britain and Switzerland and financial companies, recorded by Orbis Bureau Van Dijk in 2022 with a CDS rating available. We use the multinomial logit regression model considering 7 cathegories of rating as the dependent variable and a list of indipendent variables that come from literature. Results show a good explanatory power of the model (63%) with some specific significant independent variables, as the size and the net working capital. By adding a non-accounting variable, namely the sovereign rating, the results do not change significantly, both for the explanatory capacity of the model and for the relevance of the other independent variables