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interest of Credit Rating Agencies (CRAs). We model both the CRA conflict of understating credit risk to attract more business …, and the issuer conflict of purchasing only the most favorable ratings (issuer shopping), and examine the effectiveness of …
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interest of Credit Rating Agencies (CRAs). We model both the CRA conflict of understating credit risk to attract more business …, and the issuer conflict of purchasing only the most favorable ratings (issuer shopping), and examine the effectiveness of …
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This paper investigates whether an investor-paid credit rating model leads to rating inflation.Using the corporate bond ratings of Egan-Jones Rating Company, I find evidence that an investor-paid rating agency tends to upgrade bonds that offer a higher yield.This suggests that an investor-paid...
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