Assessing Credit Rating Agencies by Bond Issuers and Institutional Investors

By H. Baker, Sattar A. Mansi. 2001

130 citations recorded by the source corpus.

We examine how a sample of publicly traded corporate bond issuers and institutional investors assess the four major nationally recognized rating agencies and their role in capital markets. The results show that issuers and investors differ dramatically in their assessments about rating agencies. Specifically, the majority of institutional investors require only one rating when they buy rated corporate bonds, but most issuers obtain two or more ratings. Issuers and investors also differ in their assessments about whether ratings accurately reflect creditworthiness and timeliness. The results suggest that differences reflect the different roles that rating agencies provide in the market place. Copyright Blackwell Publishers Ltd 2002.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/a413d5575764125ddb62e125079d93d3efd003bf

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Citations in the corpus

Can Investor-Paid Credit Rating Agencies Improve the Information Quality of Issuer-Paid Rating Agencies? (2014, unknown): “1 The survey by Baker and Mansi (2002) reports that only 29% of bond fund managers believe the Nationally Recognized Statistical Rating Organization (NRSRO) updates their ratings in a timely and accurate manner.”
A Point-in-Time Perspective on Through-the-Cycle Ratings (2006, background): “A survey by the Association for Financial Professionals in 2002 revealed that investors are not satisfied with the timeliness of ratings.1 A similar case was made earlier by Ellis (1998) and Baker and Mansi (2002).”
Leads and lags in sovereign credit ratings. (2010, background): “Baker and Mansi (2002) argue that issuers obtain multiple ratings to address any information gaps across agencies.”