This paper examines the relationship between mortgage originator loss exposure (i.e., risk retention) and the ex post performance and initial structure and pricing of mortgage-backed securities (MBS). We argue that originator risk retention varies positively with originator-sponsor and...

Priority spreading refers to the practice of firms increasing their reliance on secured and subordinated debt and reducing their reliance on senior debt as their credit quality deteriorates. We argue that priority spreading occurs, in part, because security provides creditors with greater...

Past studies document that incentive conflicts may lead issuer-paid credit rating agencies to provide optimistically-biased ratings. In this paper, we present evidence that investors question the quality of issuer-paid ratings and raise corporate bond yields where the issuer-paid rating is more...