Revolving doors on Wall Street

• 成果类型: Article
• 署名作者: Cornaggia, Jess; Cornaggia, Kimberly J.; Xia, Han
• 署名单位: Georgetown University; American University; University of Texas System; University of Texas Dallas
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2016.01.007
• 发表日期: 2016
• 页码: 400-419
• 关键词: credit ratings; NRSRO; regulatory capture; Revolving door; Credit analysts

摘要

Credit analysts often leave rating agencies to work at firms they rate. We use benchmark rating agencies as counterfactuals to measure rating inflation in a difference-in-differences framework and find that transitioning analysts award inflated ratings to their future employers before switching jobs. We find no evidence that analysts inflate ratings of other firms they rate. Market based measures of hiring firms' credit quality further indicate that transitioning analysts' inflated ratings become less informative. We conclude that conflicts of interest at the analyst level distort credit ratings. More broadly, our results shed light on the economic consequences of revolving doors. (C) 2016 Published by Elsevier B.V.