Title : Credit rating inflation or deflation? : Tests of two competing views on credit rating standard changes
Using the universe of Compustat firms that are rated by S&P during the period of 1985-2008, we examine two competing views on how credit rating standards have changed over time and affected the quality of credit ratings. The first view is that there has been a secular tightening trend in rating standards, which results in a downward trend in credit ratings over time. The competing view is that competition in the rating industry reduces rating agencies’ incentives to maintain their reputation for providing high-quality ratings, which causes rating inflation. We find that previous results on these two competing views are largely driven by the failure to consider the slow adjustment in credit ratings: after controlling for this slow adjustment, we find that neither view is supported by the data.
학회소식
학회소식
[2010년 제 4차] Credit rating inflation or deflation?
작성자 : 관리자
조회수 : 841
게시일 :
2010-12-09