We use dynamic panel analysis to examine whether credit rating agencies achieve what they claim to achieve, namely, look into the future when assigning their ratings. We find that Moody's ratings help predict individual financial ratios over a horizon of up to five years. Ratings also predict a...

Generally, information provision and certification have been identified as the major economic functions of rating agencies. This paper analyzes whether the watchlistʺ (rating review) Instrument has extended the agencies' role towards a monitoring position, as proposed by Boot, Milbourn, and...