Non-rating revenue and conflicts of interest

• 成果类型: Article
• 署名作者: Baghai, Ramin P.; Becker, Bo
• 署名单位: Stockholm School of Economics
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2017.10.004
• 发表日期: 2018
• 页码: 94-112
• 关键词: credit ratings; Agency problems; Issuer-pays

摘要

Rating agencies produce ratings used by investors, but obtain most of their revenue from issuers, leading to a conflict of interest. We employ a unique data set on the use of non-rating services, and the associated payments, in India, to test if this conflict affects ratings quality. Agencies rate issuers that pay them for non-rating services higher (than agencies not hired for such services). Such issuers also have higher default rates. Both effects are increasing in the amount paid. These results suggest that issuers which hire agencies for non-rating services receive higher ratings despite having higher default risk. (C) 2017 Elsevier B.V. All rights reserved.