Three Letters that Move the Markets: Credit Ratings between Market Information and Legal Regulation
Journal of Applied Research in Accounting and Finance (JARAF), Vol. 6, No. 1, pp. 14-30, 2011
24 Pages Posted: 10 Nov 2011
Date Written: July 9, 2011
As demonstrated by the market reactions to downgrades of various sovereign credit ratings in 2011, the credit rating agencies occupy an important role in today’s globalized financial markets. This article provides an overview of the central characteristics of credit ratings and discusses risks arising from both their widespread use as market information and from the increasing references to credit ratings contained in laws, legal regulations and private contracts.
Keywords: credit rating agencies, sovereign ratings
JEL Classification: M40, M41
Suggested Citation: Suggested Citation