Does regulatory certification affect the information content of credit ratings?

• Autores: Valentina Bruno, Jess Cornaggia, Kimberly J. Cornaggia
• Localización: Management science: journal of the Institute for operations research and the management sciences, ISSN 0025-1909, Vol. 62, Nº. 6, 2016, págs. 1578-1597
• Idioma: inglés
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• Resumen

  • We exploit an investor-paid rating agency’s designation as a Nationally Recognized Statistical Rating Organization (NRSRO) to test whether this certification affects the agency’s information production. We use a certified issuer-paid agency as a benchmark and find robust evidence that the investor-paid agency’s ratings policy—both timelier and more symmetric with respect to positive and negative information—persists after it became certified for regulatory compliance. Our results suggest that ratings policy is more a function of rating agency compensation structure than the NRSRO certification by the U.S. Securities and Exchange Commission.