Does it matter who pays for bond ratings? Historical evidence

• 成果类型: Article
• 署名作者: Jiang, John (Xuefeng); Stanford, Mary Harris; Xie, Yuan
• 署名单位: Michigan State University; Michigan State University's Broad College of Business; Texas Christian University; Fordham University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2012.04.001
• 发表日期: 2012
• 页码: 607-621
• 关键词: credit ratings; Investor pay; Issuer pay; Moody's; S&P

摘要

We test whether Standard and Poor's (S&P) assigns higher bond ratings after it switches from investor-pay to issuer-pay fees in 1974. Using Moody's rating for the same bond as a benchmark, we find that when S&P charges investors and Moody's charges issuers, S&P's ratings are lower than Moody's. Once S&P adopts issuer-pay, its ratings increase and no longer differ from Moody's. More importantly, S&P only assigns higher ratings for bonds that are subject to greater conflicts of interest, measured by higher expected rating fees or lower credit quality. These findings suggest that the issuer-pay model leads to higher ratings. (C) 2012 Elsevier B.V. All rights reserved.