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- W1569305850 abstract "We develop a model of credit rating agencies (CRAs) based on reputation concerns. Ratings affect investors' choice and, thereby, also issuers' access to funding and default risk. We show that - in equilibrium - the informational content of credit ratings is inferior to that of CRAs' private information. We find that CRAs have a pro-cyclical impact on default risk: in a liquidity boom CRAs help resolve investors' coordination problem, and lower the probability of default; in a liquidity crunch CRAs raise the probability of default. Furthermore, rating standards tend to be pro-cyclical, while biased CRA-incentives will ultimately be selfdefeating." @default.
- W1569305850 created "2016-06-24" @default.
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- W1569305850 date "2012-01-01" @default.
- W1569305850 modified "2023-09-23" @default.
- W1569305850 title "An Equilibrium Model of Credit Rating Agencies" @default.
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- W1569305850 doi "https://doi.org/10.2139/ssrn.2233578" @default.
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