Credit rating industry business model has traditionally been based on an ‘issuer-pays' principle. Issuer-paid credit rating agencies (CRAs) have recently faced criticism regarding untimely releases of negative ratings adjustments, which is attributed to conflict of interest of their business...

We investigate whether political similarities between credit rating agencies (CRAs) and bond issuers impact credit rating quality. We find that a higher degree of similarity of political affiliation leads to a decrease in timeliness and accuracy of downgrades prior to default events. Our finding...