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  

Ulrich G. Schroeter

University of Basel - Faculty of Law

Date Written: July 9, 2011

Abstract

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

Schroeter, Ulrich G., Three Letters that Move the Markets: Credit Ratings between Market Information and Legal Regulation (July 9, 2011). Journal of Applied Research in Accounting and Finance (JARAF), Vol. 6, No. 1, pp. 14-30, 2011. Available at SSRN: https://ssrn.com/abstract=1957435

Ulrich G. Schroeter (Contact Author)

University of Basel - Faculty of Law ( email )

Switzerland

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