Purpose This study aims to investigate the effect of fifth generation mobile communication technology (5G) strategy implementation on credit ratings and to test the moderating effects of firm attributes on the focal association in the early stage of 5G business application. Design/methodology/approach The research utilized a sample of 573 unique S&P 1500 firms in the early implementation stage of 5G from 2015 to 2020. We then tested the hypotheses with the ordinal logit model. Findings The findings reveal that early-stage 5G strategy implementation negatively impacts credit ratings by increasing default risk and lowering firm value. However, this negative relationship is weakened for firms with higher cash ratios, greater slack, lower capital intensity, and for firms in high-growth industries or with 5G patents. Additionally, firms with 5G strategy implementation face higher bond yields compared to their counterparts. Practical implications This study provides an in-depth understanding of the impact of early-stage 5G strategy implementation on credit ratings for firm managers and capital market participants. Findings help managers navigate early-stage 5G credit constraints, while creditors price these risky strategies based on firm financial attributes. Originality/value This is likely to be the first study that explores the challenges of 5G strategy implementation for credit constraints. The findings of this study reveal that implementing 5G strategies in the early stage tends to signal higher risk-taking incentives. In particular, it highlights resource dependence factors that mitigate the negative impact of 5G strategy implementation on credit ratings.
Bao et al. (Thu,) studied this question.