Showing 1 - 8 of 8
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...
Persistent link: https://www.econbiz.de/10003636337
Persistent link: https://www.econbiz.de/10003651507
Credit rating agencies do not only disclose simple ratings but announce watchlists (rating reviews) and outlooks as well. This paper analyzes the economic function underlying the review procedure. Using Moody's rating data between 1982 and 2004, we find that for borrowers of high...
Persistent link: https://www.econbiz.de/10003861618
In this paper, we propose a model of credit rating agencies using the global games framework to incorporate information and coordination problems. We introduce a refined utility function of a credit rating agency that, additional to reputation maximization, also embeds aspects of competition and...
Persistent link: https://www.econbiz.de/10003275438
Do rating agencies increase or decrease financial market stability? This paper analyzes whether credit rating agencies may help to avoid inefficient self-fulfilling credit defaults. If investors follow risk-dominant strategies, we show that rating announcements and investors' private information...
Persistent link: https://www.econbiz.de/10013133852
Agency conflicts may induce managers to choose inefficiently risky investment projects that benefit stockholders at the expense of debtholders. While private debt contracts often contain covenants restricting investment choices, public debt rarely does. We therefore examine whether credit rating...
Persistent link: https://www.econbiz.de/10013101544
Persistent link: https://www.econbiz.de/10011583071
Generally, information provision and certification have been identified as the major economic functions of rating agencies. This paper analyzes whether the "watchlist" (rating review) instrument has extended the agencies' role towards a monitoring position, as proposed by Boot, Milbourn, and...
Persistent link: https://www.econbiz.de/10003750316