Rating agencies state that they take a rating action only when it is unlikely to bereversed shortly afterwards. Using a … formal representation of the rating process, I showthat such a policy provides a good explanation for the empirical evidence … informational losses, avoiding rating reversals canbe more harmful than monitoring credit quality only twice per year. [Gunter …

Using a structural model of default, I derive rating characteristics if ratings are meant tolook ‘through the cycle’ as … opposed to being based on the borrowers’ current condition.The through-the-cycle method, which is employed by most rating … power is low. Though not predictable in the usual sense, rating changesexhibit properties that call for a reconsideration of …

that estimation error leads to biasesin VaR estimates and significance levels of backtests. The biases can becorrected by …

their policy of reducing rating volatility, which builds on thethough-the-cycle approach and the avoidance of frequent … rating reversals, is beneficial tobond investors. The results also suggest that widely used statistical measures of rating … qualitymay be insufficient to judge the economic value of rating information in specific contexts. …