Abstract

https://ssrn.com/abstract=2442472
 


 



Revolving Rating Analysts and Ratings of MBS and ABS: Evidence from LinkedIn


John (Xuefeng) Jiang


Michigan State University

Isabel Yanyan Wang


Michigan State University

K. Philip Wang


Fisher School of Accounting, University of Florida

June 30, 2016


Abstract:     
This study examines whether credit rating analysts who transition from major rating agencies to issuers are associated with any rating inflation in the issuers’ mortgage-backed securities (MBS) or asset-backed securities (ABS). Using professional profiles posted on LinkedIn to identify revolving rating analysts with structured finance rating experience, we find that when issuers employ more of such analysts the ratings of their new MBS and ABS issuances appear more inflated, compared to otherwise similarly rated securities. Additional analyses show that the impact of these revolving rating analysts is more pronounced in complex deals and when the analysts are more senior, indicating that rating expertise in structured finance may play a role in MBS and ABS rating inflation. Finally, we find that at least for AAA-rated MBS and ABS, investors fail to see through the rating inflation associated with revolving rating analysts.

Number of Pages in PDF File: 62

Keywords: Credit Analysts, Rating Analysts, Credit Ratings, Mortgage-Backed Securities, Asset-Backed Securities, MBS, ABS, Financial Crisis, LinkedIn, Revolving Door, Moody's, S&P, Fitch

JEL Classification: G1, G21, G24, G28, L1


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Date posted: May 28, 2014 ; Last revised: January 30, 2017

Suggested Citation

Jiang, John (Xuefeng) and Wang, Isabel Yanyan and Wang, K. Philip, Revolving Rating Analysts and Ratings of MBS and ABS: Evidence from LinkedIn (June 30, 2016). Available at SSRN: https://ssrn.com/abstract=2442472 or http://dx.doi.org/10.2139/ssrn.2442472

Contact Information

John (Xuefeng) Jiang (Contact Author)
Michigan State University ( email )
270 North Business Complex
East Lansing, MI 48824-1034
United States
517-432-3031 (Phone)
517-432-1101 (Fax)
HOME PAGE: http://www.msu.edu/~jiangj/
Isabel Wang
Michigan State University ( email )
N233 Business Complex
Broad School of Business
East Lansing, MI 48824-1122
United States
HOME PAGE: http://www.msu.edu/~wangyany/
Philip Wang
Fisher School of Accounting, University of Florida ( email )
Gainesville, FL
United States
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