Analyst Promotions within Credit Rating Agencies: Accuracy or Bias?

Darren J. Kisgen, Matthew Osborn and Jonathan Reuter

No 22477, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine whether credit rating agencies reward accurate or biased analysts. Using data collected from Moody’s corporate debt credit reports, we find that Moody’s is more likely to promote analysts who are accurate, but less likely to promote analysts who downgrade frequently. Combined, analysts who are accurate but not overly negative are approximately twice as likely to get promoted. Further, analysts whose rating changes are more informative to the market are more likely to get promoted, unless their ratings changes cause large negative market reactions. Moody’s balances a desire for accuracy with a desire to cater to its corporate clients.

JEL-codes: G14 G24 G28 (search for similar items in EconPapers)
Date: 2016-08
Note: CF
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published as Darren J. Kisgen & Jordan Nickerson & Matthew Osborn & Jonathan Reuter, 2020. "Analyst Promotions within Credit Rating Agencies: Accuracy or Bias?," Journal of Financial and Quantitative Analysis, vol 55(3), pages 869-896.

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Journal Article: Analyst Promotions within Credit Rating Agencies: Accuracy or Bias? (2020)
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