Hoppe-Wewetzer, Heidrun; Siemering, Christian - In: Journal of Economics and Finance 46 (2021) 1, pp. 188-206
This paper investigates the incentives of a credit rating agency (CRA) to generate accurate ratings under an advertisement-based business model. To this end, we study a two-period endogenous reputation model in which a CRA can increase the precision of its ratings by exerting effort. The CRA...