Theory predicts rating agencies' incentive conflicts to be stronger in boom periods, thereby leading to biased ratings and a reduced level of rating quality. We empirically investigate this prediction using a large data set of almost 10,000 U.S. corporate bonds, publicly issued between 1990 and...

Based on a sample of 3254 floating rate tranches from 617 ABS-CDOs (collateralized debt obligations backed by asset-backed securities), this paper tests the “rating overdependence” hypothesis – i.e., that ratings of structured products are a sufficient statistic (in terms of predicting...