"This paper provides new evidence regarding the information content of debt ratings. We show that noninvestment grade subordinated issues are consistently priced too high (the yield is too low), and the reverse is true for some investment grade bonds. We relate this empirical bias to a notching...

Corporations seem to issue much more senior than subordinated debt and ratings agencies seem to treat these two types of bonds very differently. We document and explore these differences between senior and subordinated debt. Unlike previous work which focused on rating changes, this paper...

This paper investigates the question of whether bond ratings serve as a basis for market prices of bonds or whether investors use their own research and view the ratings only as rough guidelines. Unlike previous work, which focused on rating changes, this paper uses a new data base to consider...