This paper investigates whether and how the initiation of Credit Default Swaps (CDS) trading affects analyst optimism. First, we document that analyst forecasts become less optimistic after the initiation of CDS trading. Second, we find that the dampening effect of CDS on analyst optimism is...

This study examines whether the quality of borrowers' accounting information affects the accuracy and timeliness of credit ratings issued by rating agencies. I consider two possible effects. The news effect posits that higher quality accounting provides better information to credit rating...

This study finds that better reporting quality is associated with less uncertainty about credit risk as captured by disagreement among the credit rating agencies. The results also show that reporting quality is more important in reducing uncertainty when debt market participants have less access...

This study examines the sources of credit risk associated with asset securitizations and whether credit rating agencies and the bond market differ in their assessment of this risk. Measuring credit risk using credit ratings, we find the securitizing firm's credit risk is positively related to...

Models of financial distress rely primarily on accounting-based information (e.g. [Altman, E., 1968. Financial ratios, discriminant analysis and the prediction of corporate bankruptcy. Journal of Finance 23, 589–609; Ohlson, J., 1980. Financial ratios and the probabilistic prediction of...

We examine credit market responses to the linguistic tone of disclosures made in 10-Q/K fillings, controlling for the information content conveyed in the reports. Examining windows around quarterly filings, we find that uncertain tone levels are associated with changes in credit default swap...

We investigate an unexplored channel—loss given default—through which accounting information can shape the design of debt contracts. Using a sample of defaulted bonds, we find that borrower accounting information available at contract initiation possesses significant power for predicting...

This paper models how to calculate credit spreads on high-yield bond issues if the corporation has no underlying traded stocks. The model is developed from existing literature and from an intuitive idea and will not use outdated financial ratios and variables. We find that the use of outdated...

This paper examines whether the tone of corporate textual disclosures related to risk and uncertainty conveys relevant information to the credit default swap (CDS) market. Prior studies largely focus on the amount of risk disclosures and provide inconclusive evidence on the usefulness of risk...

This paper elucidates the importance of the information content of text information from public sources, including newspapers and corporate filings, has for credit market investors. We adopted news coverage and news tone to quantify text information from news articles. We captured the...