Where the Heart Is: Information Production and the Home Bias

• 成果类型: Article
• 署名作者: Cornaggia, Jess N.; Cornaggia, Kimberly J.; Israelsen, Ryan D.
• 署名单位: Pennsylvania Commonwealth System of Higher Education (PCSHE); Pennsylvania State University; Pennsylvania State University - University Park; Michigan State University; Michigan State University's Broad College of Business
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2019.3438
• 发表日期: 2020
• 关键词: credit ratings; HOME BIAS; municipal debt; Information production; capital markets regulation

摘要

This paper tests whether home bias exists among information producers. We find that credit analysts are more generous when rating issuers from their home states compared with (a) benchmark analysts from outside the state and (b) their own standards for rating issuers from other states. This home analyst effect strengthens around key rating certifications (AAA and investment grade), reduces credit spreads, and expands affected issuers' debt capacity. We conduct several tests to address the possibility that the observed home analyst effect reflects a selection effect based on informational advantages and conclude that it instead reflects a home bias.