We find that large shareholders of Moody's (affiliated investors) abnormally decrease their stock ownerships in a firm before its downgrade by Moody's. This finding is stronger for informationally opaque stocks and active affiliated investors, significant only after Moody's initial public...

We investigate the network structure of syndicated lending markets and evaluate the impact of lenders' network centrality, considered as measures of their experience and reputation, on borrowing costs. We show that the market for syndicated loans is a “small world” characterized by large...

We investigate the network structure of syndicated lending markets and evaluate the impact of lenders' network centrality, considered as measures of their experience and reputation, on borrowing costs. We show that the market for syndicated loans is a, “small world,” characterized by large...

Credit risk measurement and management become more important in all financial institutions in the light of the current financial crisis and the global recession. This particularly applies to most of the complex structured financing forms whose risk cannot be quantified with com-mon rating...

Credit ratings are ordinal predictions for the default risk of an obligor. To evaluate the accuracy of such predictions commonly used measures are the Accuracy Ratio or, equivalently, the Area under the ROC curve. The disadvantage of these measures is that they treat default as a binary variable...

Standard explanatory variables that determine credit ratings do not achieve significant effects in a sample of 100 US non-financial firms in an ordered probit panel estimation. Sample size and selection as well as the distribution of explanatory variables across rating classes may be the cause...

Credit ratings are ordinal predictions for the default risk of an obligor. To evaluate the accuracy of such predictions commonly used measures are the Accuracy Ratio or, equivalently, the Area under the ROC curve. The disadvantage of these measures is that they treat default as a binary variable...

In this paper we use credit rating data from two large Swedish banks to elicit evidence on banks' loan monitoring ability. For these banks, our tests reveal that banks' credit ratings indeed include valuable private information from monitoring, as theory suggests. However, our tests also reveal...

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...

Firm circumstances change but rating agencies may not make timely revisions to their ratings, thereby increasing information asymmetry between firms and the market. We examine whether firms time the securities market before a credit rating agency publicly reveals its decision to change a firm's...