I examine whether rating agencies cater to borrowers with rating-based performance-priced loan contracts (PPrating firms). I use data from Moody׳s Financial Metrics on its quantitative adjustments for off-balance-sheet debt and qualitative adjustments for soft factors. In the cross-section and...

I study the use of credit ratings in debt contracts. When debt contracts use credit ratings rather than accounting ratios to enforce restrictions on borrowers, there is likely to be increased pressure on rating agencies to cater to borrower incentives. I investigate whether the explicit use of...

I examine whether rating agencies cater to borrowers with rating-based performance-priced loan contracts (PPrating firms). I use data from Moody's Financial Metrics on its quantitative adjustments for off-balance-sheet debt and qualitative adjustments for soft factors. In the cross-section and...