Credit rating agencies and conflict of interest
Harvey Teck Wee CHEONG
10.25440/smu.12292991.v1
https://researchdata.smu.edu.sg/articles/thesis/Credit_rating_agencies_and_conflict_of_interest/12292991
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<td><p>While
formal anecdotal evidence of credit rating agencies flouting conflict of
interest guidelines have been published by the SEC and the Senate,
statistical evidence of this has yet to be found. Taking advantage of the
bond rating refinement undertaken by Moody’s on April 26 1982, as well as the
fact that rating fees are positively related to the number or size of new
bond issues, we examine the relationship between the bond rating refinements
and the number and size of new bond issues within the five years before and
after the refinement. We find evidence that bond "upgrades" are
positively correlated with the number and size of new bond issues before the
refinement, and that bond "downgrades" are similarly negatively correlated,
which may be indicative of a manifested conflict of interest at Moody’s
during the bond rating refinement of April 26 1982.</p></td></tr></table>
2020-05-13 09:53:52
credit rating agency
bond ratings
conflict of interest
Finance