Tiebreaker: Certification and Multiple Credit Ratings
Erasmus University Rotterdam (EUR) - Finance
University of Notre Dame
William N. Goetzmann
Yale School of Management - International Center for Finance; National Bureau of Economic Research (NBER)
NBER Working Paper No. w15331
This paper explores the economic role credit rating agencies play in the corporate bond market. We consider three existing theories about multiple ratings: information production, rating shopping and regulatory certification. Using differences in rating composition, default prediction and credit spread changes, our evidence only supports regulatory certification. Marginal, additional credit ratings are more likely to occur because of, and seem to matter primarily for regulatory purposes, but do not seem to provide significant additional information related to credit quality.
Number of Pages in PDF File: 66working papers series
Date posted: September 15, 2009
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