Citations (2)



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

January 20, 2014

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 ratings inflation in a difference-in-difference framework. We find that transitioning analysts become more favorable to their future employers in the year prior to their transitions. We further test the responsiveness of ratings to market-based measures of firms’ credit quality, and find that these conflicted ratings become less responsive to changes in credit quality in this period. Our results reveal the presence of previously untested forces that affect information production by credit rating analysts.

Number of Pages in PDF File: 53

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

JEL Classification: G14, G24, G28, G32

working papers series

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Date posted: September 23, 2012 ; Last revised: January 21, 2014

Suggested Citation

Cornaggia, Jess and Cornaggia, Kimberly Rodgers and Xia, Han, Revolving Doors on Wall Street (January 20, 2014). 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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