Financial Reporting Quality and Uncertainty About Credit Risk Among the Credit Ratings Agencies

45 Pages Posted: 8 Jan 2014 Last revised: 30 Sep 2017

See all articles by Brian Akins

Brian Akins

Rice University - Jesse H. Jones Graduate School of Business

Date Written: August 25, 2017

Abstract

This study finds that better reporting quality is associated with less uncertainty about credit risk as captured by disagreement among the credit rating agencies. The results also show that reporting quality is more important in reducing uncertainty when debt market participants have less access to private information. To mitigate endogeneity concerns, I use the quasi-natural experiment induced by a change in accounting standards that improved reporting quality. Implementation of the standard led to less disagreement among the rating agencies. Overall, this study contributes to the literature on the impact of reporting quality on debt markets and intermediaries.

Keywords: Financial reporting quality, credit ratings, uncertainty, SFAS 131

JEL Classification: M41, G29

Suggested Citation

Akins, Brian K., Financial Reporting Quality and Uncertainty About Credit Risk Among the Credit Ratings Agencies (August 25, 2017). Available at SSRN: https://ssrn.com/abstract=2375976 or http://dx.doi.org/10.2139/ssrn.2375976

Brian K. Akins (Contact Author)

Rice University - Jesse H. Jones Graduate School of Business ( email )

6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States

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