Understanding credit ratings quality: evidence from UK debt market participants

Angus Duff, Sandra Einig

Research output: Contribution to journalArticle

11 Citations (Scopus)

Abstract

This study seeks to identify: (i) the demand for corporate bond ratings provided by credit ratings agencies (CRAs); (ii) how issuers select CRAs; and (iii) to better understand ratings quality, a term widely used by commentators, politicians and regulators, but under-explored in the academic literature. Interviews identify the principal source of demand for rating information is to reduce agency conflicts between issuers and investors. Issuers typically engage between one and three credit ratings agencies to rate their debt, implying a heterogeneous demand for ratings services, and different levels of ratings quality. However, ratings quality extends beyond competence and independence to include factors relating to professional judgment, communication, transparency, and the quality and continuity of analytic staff. Findings were discussed in the light of the ongoing international policy debate concerning CRAs.
Original languageEnglish
Pages (from-to)107-119
JournalThe British Accounting Review
Volume41
Issue number2
DOIs
Publication statusPublished - Jun 2009

Fingerprint

Rating
Credit rating
Debt
Credit rating agencies
Politicians
Staff
Transparency
Continuity
Factors
Corporate bonds
Communication
Agency conflict
Bond ratings
Investors
International policy
Professional judgment

Keywords

  • credit ratings
  • credit ratings agencies
  • credit ratings quality

Cite this

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Understanding credit ratings quality : evidence from UK debt market participants. / Duff, Angus; Einig, Sandra.

In: The British Accounting Review, Vol. 41, No. 2, 06.2009, p. 107-119.

Research output: Contribution to journalArticle

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