Credit rating agencies have been widely criticized to issue inflated ratings due to the issuer-pay business model. This paper analyzes the corporate bond rating standards and tests whether reputation concerns are powerful enough to discipline the rating agencies. Through a simple theoretical...

The activity of Credit Rating Agencies (CRAs) can lead to Excessive Volatility Risk (EVR), adversely affecting issuances of debt by sovereign governments. By EVR, we mean the risk of effects on bond yields, caused by ratings which are independent from the supply of new information (information...

This paper analyses, from an economic perspective, the viability of different business models in providing accurate ratings of credit risk to investors. It considers several different business models for credit ratings agencies (CRAs), the currently dominant issuer-pays model, the investor-pays...

The Dodd-Frank Act promised to usher in sweeping changes to overhaul the rating agency industry. But in the years after the Act's passage, hopes have turned into disappointment as the most important questions of how to enhance rating agency competition, accuracy, and accountability remain...

I examine whether rating agencies cater to borrowers with rating-based performance-priced loan contracts (PPrating firms). I use data from Moody's Financial Metrics on its quantitative adjustments for off-balance-sheet debt and qualitative adjustments for soft factors. In the cross-section and...

We examine two competing views regarding the impact of competition among credit rating agencies on rating quality: the view that rating agencies do not sacrifice their reputation by inflating firm ratings and the view that competition among rating agencies arising from the conflict of interest...