THE CREDIT RATING INDUSTRY

By A. Miglionico. The Governance of Credit Rating Agencies, 2019

192 citations recorded by the source corpus.

In the aftermath of the global financial crisis, credit rating agencies (CRAs) were blamed for exacerbating systemic risk because of the role they played in the financial markets as an information intermediary between investors and issuers.1 CRAs are private companies which provide public opinions as to the creditworthiness of debt instruments (bonds and commercial paper) and are mainly financed by commission fees.2 Ratings are based on issuers’ public information and are taken into account in determining such matters as trends and investment decisions.3 Ratings estimate the risk in relative rank order, but they do not predict credit risks in terms of a specific frequency of default or loss,4 as observed ‘ratings are forward-looking statements which represent the raters’ judgement of the creditworthiness of an entity’.5

Subfields: Management Science and Operations Research

View Paper: https://www.semanticscholar.org/paper/d205d1ba10f0a7480ddc893ac97a70a3f86c71ed

Citations in the corpus

• Why is Corporate Virtue in the Eye of The Beholder? The Case of ESG Ratings (2021, unknown): “Closer to our paper, evidence in the credit rating literature suggests that the lower the average credit rating, the greater the disagreement among the agencies over bonds with low ratings than with high ratings (Cantor and Packer 1994).”