Mandatory financial information disclosure and credit ratings

• 成果类型: Article
• 署名作者: Vanhaverbeke, Steven; Balsmeier, Benjamin; Doherr, Thorsten
• 署名单位: KU Leuven; University of Luxembourg; Leibniz Association; Zentrum fur Europaische Wirtschaftsforschung (ZEW)
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2024.101676
• 发表日期: 2024
• 关键词: bond; debt; ECONOMICS; agencies; QUALITY; equity

摘要

When firms are forced to publicly disclose financial information, credit rating agencies are generally expected to improve their risk assessments. Theory predicts such an information quality effect but also suggests an adverse reputational concerns effect since credit analysts may become increasingly concerned about alleged rating failures. We empirically examine these predictions using a large-scale quasi-natural experiment in Germany, where a new compliance regime required firms to disclose annual financial statements publicly. Consistent with the reputational concerns hypothesis, we find an average increase in credit rating downgrades that is entirely driven by changes in the discretionary assessments of credit analysts rather than changes in firm fundamentals. Following public disclosure regulations, analysts tend to give positive private information less weight in their risk assessments while assigning greater weight to negative public information. A final set of results indicates that professional credit providers recognize that the resulting downgrades are not warranted.