Standards are Poor: On Competence and Professional Integrity at the Leading Rating Agency

Manfred Gaertner ()
Authors registered in the RePEc Author Service: Manfred Gärtner ()

No 1418, Economics Working Paper Series from University of St. Gallen, School of Economics and Political Science

Abstract: Competence behind the rating of sovereign countries is crucial, given that the market for government bonds may be vulnerable to multiple equilibria and self-fulfilling prophecies. With this in mind, this paper reviews and scrutinizes an official Standard and Poor’s (S&P) publication that addresses key issues surrounding the market for government bonds and the role of sovereign ratings. It encounters: a low level of competence, revealed in an inability to engage in logical discourse and an inadequate grasp of crucial concepts such as multiple equilibria and self-fulfilling prophecy; obliviousness to S&P’s own rating methodology; and a nonchalant treatment of facts that casts a poor light on its professional integrity.

Keywords: Credit rating agencies; competence; integrity; sovereign ratings; Standard and Poor’s (search for similar items in EconPapers)
JEL-codes: E65 G12 G24 H63 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2014-07
New Economics Papers: this item is included in nep-hme
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Persistent link: https://EconPapers.repec.org/RePEc:usg:econwp:2014:18

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