Understanding credit ratings quality: Evidence from UK debt market participants

Angus Duff and Sandra Einig

The British Accounting Review, 2009, vol. 41, issue 2, 107-119

Abstract: This study seeks to identify: (i) the demand for corporate bond ratings provided by credit ratings agencies (CRAs); (ii) how issuers select CRAs; and (iii) to better understand ratings quality, a term widely used by commentators, politicians and regulators, but under-explored in the academic literature. Interviews identify the principal source of demand for rating information is to reduce agency conflicts between issuers and investors. Issuers typically engage between one and three credit ratings agencies to rate their debt, implying a heterogeneous demand for ratings services, and different levels of ratings quality. However, ratings quality extends beyond competence and independence to include factors relating to professional judgment, communication, transparency, and the quality and continuity of analytic staff. Findings were discussed in the light of the ongoing international policy debate concerning CRAs.

Keywords: Credit ratings; Credit ratings agencies; Credit ratings quality (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (21)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:bracre:v:41:y:2009:i:2:p:107-119

DOI: 10.1016/j.bar.2009.02.001

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