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Legal Liabilities of Credit Rating Agencies in Structured Finance (CDO) : Based upon the Business Ethics for Investor Protection
Shin, Hyeon Tak - 2014
-purification.In considering tort liability of CRAs, First Amendment protection should not be allowed to CRAs, when they were hired to participate … in structuring CDOs, which substantially impaired the objectivity of their rating business. Contractual liability should …
Persistent link: https://www.econbiz.de/10013070308
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A Strict Liability Regime for Rating Agencies
Pacces, Alessio M. - 2014
This paper argues that a mitigated strict liability regime can incentivize Credit Rating Agencies (CRAs) to produce … order to avoid crushing liability. Moreover, CRAs are allowed to choose how much to commit to their predictions. CRAs may … opt out of liability even entirely, unless their ratings are relevant for regulation. Finally, corrections in the relevant …
Persistent link: https://www.econbiz.de/10013057592
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Economic Consequences of Reputational Damage to Credit Rating Agencies
Gogar, Apoorv; Manchiraju, Hariom; Sunder, Shyam V. - 2023
Our study documents the direct and spillover costs arising from the loss of reputation for credit rating agencies (CRAs). Credit ratings are essential for a well-functioning debt market, and the integrity of these ratings depends on the reputation of the CRAs. Using data from the unexpected...
Persistent link: https://www.econbiz.de/10014349805
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Can Reputation Concerns Always Discipline Credit Rating Agencies? Evidence from Corporate Bond Issuance Ratings
Wang, Tao - 2012
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...
Persistent link: https://www.econbiz.de/10013115101
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Do Rating Agencies Cater? Evidence from Rating-Based Contracts
Kraft, Pepa - 2014
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...
Persistent link: https://www.econbiz.de/10013068874
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Rating a Robo-Rater
Nanigian, David - 2020
Since 2011, Morningstar has issued Morningstar Analyst Ratings on many of the largest mutual funds in the United States. In June 2017, Morningstar launched the Morningstar Quantitative Rating™ to provide a forward‐looking rating on all mutual funds. Morningstar uses a “robo‐rater”...
Persistent link: https://www.econbiz.de/10012836347
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Do Rating Agencies Benefit From Providing Higher Ratings? Evidence From the Consequences of Municipal Bond Ratings Recalibration
Beatty, Anne - 2019
We ask whether credit rating agencies receive higher fees and gain greater market share when they provide more favorable ratings. To investigate this question we use the 2010 rating scale recalibration by Moody's and Fitch, which increased ratings absent any underlying change in issuer credit...
Persistent link: https://www.econbiz.de/10012900654
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Financial Reporting and Credit Ratings : On the Effects of Competition in the Rating Industry and Rating Agencies' Gatekeeper Role
Lee, Kyungha - 2019
This paper studies firms' financial reporting incentives in the presence of strategic credit rating agencies and how these incentives are affected by the level of competition in the rating industry and by rating agencies' role as gatekeepers to debt markets. We develop a model featuring an...
Persistent link: https://www.econbiz.de/10012899327
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Seller-Paid Ratings
Kovbasyuk, Sergey - 2018
A rater is paid by a seller, observes a signal about the seller's product, and issues a public cheap-talk rating for potential buyers. I characterize the partition of the rater's information into ratings issued following public payments from the seller to the rater, and ratings issued when the...
Persistent link: https://www.econbiz.de/10012938578
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Financial Reporting and Credit Ratings : On the Effects of Competition in the Rating Industry and Rating Agencies' Gatekeeper Role
Lee, Kyungha - 2019
This paper studies firms' financial reporting incentives in the presence of strategic credit rating agencies and how these incentives are affected by the level of competition in the rating industry and by rating agencies' role as gatekeepers to debt markets. We develop a model featuring an...
Persistent link: https://www.econbiz.de/10012868204