We test if issuers of asset- and mortgage-backed securities receive rating favors from agencies with which they maintain strong business relationships. Controlling for issuer fixed effects and a large set of credit risk determinants, we show that agencies publish better ratings for those issuers...

We reconsider the role of asymmetric information in motivating the issuance of callable bonds. The previous literature has emphasized a possibility that a call feature serves as a signal of issuer quality. We demonstrate that asymmetric information can motivate use of a call even when this...