EconPapers    
Economics at your fingertips  
 

The economics of rating watchlists: evidence from rating changes

Christian Hirsch and Christina Bannier

No 88, Frankfurt School - Working Paper Series from Frankfurt School of Finance and Management

Abstract: Generally, information provision and certification have been identified as the major economic functions of rating agencies. This paper analyzes whether the watchlist (rating review) instrument has extended the agencies' role towards a monitoring position, as proposed by Boot, Milbourn, and Schmeits (2006). Using a data set of Moody's ratings between 1982 and 2004, we find that the overall information content of rating action has indeed increased due to the introduction of the watchlist procedure. Our findings suggest that rating reviews help to establish implicit monitoring contracts between agencies and borrowers and as such enable a finer partition of rating information, thereby contributing to a higher information quality.

Keywords: Credit rating agencies; watchlist; market reactions; event study (search for similar items in EconPapers)
JEL-codes: G14 G29 G33 (search for similar items in EconPapers)
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (63)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/27854/1/577675400.PDF (application/pdf)

Related works:
Working Paper: The economics of rating watchlists: Evidence from rating changes (2007) Downloads
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:zbw:fsfmwp:88

Access Statistics for this paper

More papers in Frankfurt School - Working Paper Series from Frankfurt School of Finance and Management Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics (econstor@zbw-workspace.eu).

 
Page updated 2025-03-31
Handle: RePEc:zbw:fsfmwp:88