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...

For models of the probability of informed trading (PIN), estimation can fail for firms with high levels of trading due to computer over/under-flow. Since active firms tend to have large market capitalizations, studies that use PIN have excluded as much as 40% of total market capitalization from...