Does Competition Affect Truth Telling? An Experiment with Rating Agencies

Jean Paul Rabanal () and Olga Rud ()

Review of Finance, 2018, vol. 22, issue 4, 1581-1604

Abstract: We use an experimental approach to study the effect of market structure on the incidence of misreporting by credit rating agencies. In the game, agencies receive a signal regarding the type of asset held by the seller and issue a report. The sellers then present the asset, with the report if one is solicited, to the buyer for purchase. We find that competition among rating agencies significantly reduces the likelihood of misreporting.

Keywords: Credit rating agencies; Conflicts of interest; Market structure; Laboratory experiment (search for similar items in EconPapers)
JEL-codes: C91 D43 D82 G24 L15 (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
http://hdl.handle.net/10.1093/rof/rfx012 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Does competition affect truth-telling? An experiment with rating agencies (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:revfin:v:22:y:2018:i:4:p:1581-1604.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

Review of Finance is currently edited by Marcin Kacperczyk

More articles in Review of Finance from European Finance Association Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().