Citations (4)



Revolving Doors on Wall Street

Jess Cornaggia

Georgetown University

Kimberly Rodgers Cornaggia

American University - Kogod School of Business

Han Xia

University of Texas at Dallas - Naveen Jindal School of Management

March 11, 2015

Credit analysts often leave rating agencies to work at firms they rate. These analyst transfers provide a unique laboratory for studying revolving door effects. Benchmark rating agencies provide counterfactuals which allow us to measure rating inflation in a difference-in-differences framework. We find that transitioning analysts become more favorable to their future employers prior to their transitions. Market-based measures of hiring firms’ credit quality further indicate that these conflicted ratings become less informative. We conclude that conflicts of interest at the analyst level distort credit ratings.

Number of Pages in PDF File: 65

Keywords: Credit Ratings, Capital Markets Regulation, Human Capital, Regulatory Capture, Revolving Door, Credit Analysts, NRSROs, Analyst Labor Market

JEL Classification: G14, G24, G28, G32

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Date posted: September 23, 2012 ; Last revised: March 13, 2015

Suggested Citation

Cornaggia, Jess and Cornaggia, Kimberly Rodgers and Xia, Han, Revolving Doors on Wall Street (March 11, 2015). Available at SSRN: http://ssrn.com/abstract=2150998 or http://dx.doi.org/10.2139/ssrn.2150998

Contact Information

Jess Cornaggia
Georgetown University ( email )
3700 O Street, NW
Washington, DC 20057
United States
HOME PAGE: http://www.jesscornaggia.com
Kimberly Rodgers Cornaggia (Contact Author)
American University - Kogod School of Business ( email )
4400 Massachusetts Avenue NW
Washington, DC 20816-8044
United States
Han Xia
University of Texas at Dallas - Naveen Jindal School of Management ( email )
P.O. Box 830688
Richardson, TX 75083-0688
United States
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