The Economics of Rating Watchlists: Evidence from Rating Changes

Christian W. Hirsch · Christina E. Bannier

34 citations0/0 files storedRePEc: Research Papers in Economics

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Credit Risk and Financial Regulations Corporate Finance and Governance Financial Distress and Bankruptcy Prediction

Abstract

Generally, information provision and certifcation 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 rating history between 1982 and 2004, we find that the overall information content of rating action has indeed increased since 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.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 34 citations exist upstream.

References

1997Event Studies in Economics and Finance 2005Partial adjustment toward target capital structures 1991Event-study methodology under conditions of event-induced variance 2005Does the Source of Capital Affect Capital Structure?2004The relationship between credit default swap spreads, bond yields, and credit rating announcements 1992The Effect of Bond Rating Agency Announcements on Bond and Stock Prices 2005How Does Industry Affect Firm Financial Structure?1998The Declining Credit Quality of U.S. Corporate Debt: Myth or Reality?

Cited by

2008The genesis of the Black-Scholes option pricing formula 2010Is there a Holdup Benefit in Heterogeneous Multiple Bank Financing?2010On the valuation of fader and discrete barrier options in Heston's stochastic volatility model 2008Private Equity und Familienunternehmen: eine Untersuchung unter besonderer Berücksichtigung deutscher Maschinen- und Anlagenbauunternehmen

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.