Tiebreaker: Certification and Multiple Credit Ratings

66 Pages Posted: 15 Sep 2009 Last revised: 24 May 2023

See all articles by Dion Bongaerts

Dion Bongaerts

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM)

Martijn Cremers

University of Notre Dame; ECGI

William N. Goetzmann

Yale School of Management - International Center for Finance; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: September 2009

Abstract

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.

Suggested Citation

Bongaerts, Dion and Cremers, K. J. Martijn and Goetzmann, William N., Tiebreaker: Certification and Multiple Credit Ratings (September 2009). NBER Working Paper No. w15331, Available at SSRN: https://ssrn.com/abstract=1472269

Dion Bongaerts

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
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Netherlands

K. J. Martijn Cremers

University of Notre Dame ( email )

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Notre Dame, IN 46556-0399
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ECGI ( email )

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William N. Goetzmann (Contact Author)

Yale School of Management - International Center for Finance ( email )

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