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A Closer Look at Credt Rating Processes: Uncovering the Impact of Analyst Rotation

Kilian R. Dinkelaker (), Andreas-Walter Mattig () and Stefan Morkoetter

No 1911, Working Papers on Finance from University of St. Gallen, School of Finance

Abstract: We investigate the effect of credit analyst rotation in the context of long-term ratings of S&P 500 issuers between 2002 and 2015. We find that analyst rotation in the coverage of issuers is associated with higher rating activity and a lower credit risk assessment (e.g., rating downgrades) following the appointment of a new credit analyst. Our results provide empirical support for policies relating to mandatory credit analyst rotation programs.

Keywords: Rating agencies; credit ratings; credit analysts; rotation policy; analyst bias (search for similar items in EconPapers)
JEL-codes: G14 G24 G28 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2019-08
New Economics Papers: this item is included in nep-rmg
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