An Empirical Analysis of Changes in Credit Rating Properties: Timeliness, Accuracy and Volatility

Posted: 10 Nov 2008

See all articles by Mei Cheng

Mei Cheng

University of Arizona - Department of Accounting

Monica Neamtiu

City University of New York - Stan Ross Department of Accountancy

Date Written: November 6, 2008

Abstract

In recent years, credit rating agencies have faced increased regulatory pressure and investor criticism for their ratings' lack of timeliness. This study investigates whether and how rating agencies respond to such pressure and criticism. We find that the rating agencies not only improve rating timeliness, but also increase rating accuracy and reduce rating volatility. Our findings support the criticism that, in the past, rating agencies did not avail themselves of the best rating methodologies/efforts possible. When their market power is threatened by the possibility of increased regulatory intervention and/or reputation concerns, rating agencies respond by improving their credit analysis.

Keywords: credit ratings, rating properties, regulatory pressure, investor criticism

Suggested Citation

Cheng, Mei and Neamtiu, Monica, An Empirical Analysis of Changes in Credit Rating Properties: Timeliness, Accuracy and Volatility (November 6, 2008). Journal of Accounting & Economics (JAE), Forthcoming, Available at SSRN: https://ssrn.com/abstract=1296855

Mei Cheng (Contact Author)

University of Arizona - Department of Accounting ( email )

Tucson, AZ 85721
United States

Monica Neamtiu

City University of New York - Stan Ross Department of Accountancy ( email )

One Bernard Baruch Way, Box B12-225
New York, NY 10010
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
1,481
PlumX Metrics