Abstract

http://ssrn.com/abstract=1962840
 
 

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Does Regulatory Certification Affect the Information Content of Credit Ratings?


Valentina Bruno


American University - Department of Finance and Real Estate

Jess Cornaggia


Georgetown University

Kimberly Rodgers Cornaggia


American University - Kogod School of Business

October 12, 2014

Management Science, Forthcoming

Abstract:     
We exploit an investor-paid rating agency’s designation as a Nationally Recognized Statistical Rating Organization (NRSRO) to test whether this certification affects the agency’s information production. We use a certified issuer-paid agency as a benchmark and find robust evidence that the investor-paid agency’s ratings policy – both timelier and more symmetric with respect to positive and negative information – persists after it became certified for regulatory compliance. Our results suggest that ratings policy is more a function of rating agency compensation structure than the NRSRO certification by the SEC.

Number of Pages in PDF File: 47

Keywords: Credit Ratings, NRSRO, Capital Markets Regulation, Certification

JEL Classification: G21, G28, G38

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Date posted: November 22, 2011 ; Last revised: November 12, 2014

Suggested Citation

Bruno, Valentina and Cornaggia, Jess and Cornaggia, Kimberly Rodgers, Does Regulatory Certification Affect the Information Content of Credit Ratings? (October 12, 2014). Management Science, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1962840 or http://dx.doi.org/10.2139/ssrn.1962840

Contact Information

Valentina Giulia Bruno
American University - Department of Finance and Real Estate ( email )
Kogod School of Business
4400 Massachusetts Ave., N.W.
Washington, DC 20016-8044
United States
Jess Cornaggia (Contact Author)
Georgetown University ( email )
3700 O Street, NW
Washington, DC 20057
United States
HOME PAGE: http://www.jesscornaggia.com
Kimberly Rodgers Cornaggia
American University - Kogod School of Business ( email )
4400 Massachusetts Avenue NW
Washington, DC 20816-8044
United States
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