Does Regulatory Certification Affect the Information Content of Credit Ratings?

We exploit an investor-paid rating agency’s designation as a Nationally Recognized Statistical Rating Organization (NRSRO) to test whether this certification affects the agency’s information production. We use a certified issuer-paid agency as a benchmark and find robust evidence that the investor-paid agency’s ratings policy—both timelier and more symmetric with respect to positive and negative information—persists after it became certified for regulatory compliance. Our results suggest that ratings policy is more a function of rating agency compensation structure than the NRSRO certification by the U.S. Securities and Exchange Commission. This paper was accepted by Gustavo Manso, finance.

• 저널Management Science · 62(6) · 1578–1597
• 토픽Credit Risk and Financial Regulations · Finance
• DOI10.1287/mnsc.2015.2188
• 저자Valentina Bruno, Jess Cornaggia, Kimberly Cornaggia