Regulating a highly concentrated industry: Implications fromDodd-Frank

Alexander Rieber

VfS Annual Conference 2021 (Virtual Conference): Climate Economics from Verein für Socialpolitik / German Economic Association

Abstract: Using an international sample of more than 65,000 rating actions by Fitch, Moody's and S&P, we analyze the effect of the Dodd-Frank Act on credit ratings. We document that (i) rating report content changes significantly after Dodd-Frank and (ii) show, by exploiting within firm-quarter variation, that ratings significantly improve after DoddFrank. While ratings are more accurate, updated more frequently, and reflect firm fundamentals more closely, there is no evidence for a decrease in rating stability after Dodd-Frank. Firms, especially constrained firms, benefit and issue more debt after rating agencies' first post Dodd-Frank rating action. For European firms, effects are generally weaker than for U.S. firms

Keywords: Dodd-Frank; Regulation; Cosine Similarity; Credit Rating; Credit Rating Report; Natural Experiment (search for similar items in EconPapers)
JEL-codes: G01 G14 G24 G28 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc21:242434

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