We investigate ratings quality across uncertain and normal times proxied by variations in economic policy uncertainty. We find that increased policy uncertainty is associated with weaker rating standards. This finding is unrelated to variations in macroeconomic conditions and holds when we use...

We find that large shareholders of Moody's (affiliated investors) abnormally decrease their stock ownerships in a firm before its downgrade by Moody's. This finding is stronger for informationally opaque stocks and active affiliated investors, significant only after Moody's initial public...

This paper investigates the motivations of Credit Rating Agencies (CRAs) to change their ratings, and the consequences of those changes. We propose a new measure of ratings stability that summarizes the information in a ratings transition matrix into a single scalar number. We find that the...

Rating agencies produce ratings used by investors, but obtain most of their revenue from issuers, leading to a conflict of interest. We employ a unique data set on the use of non-rating services, and the associated payments, in India, to test if this conflict affects ratings quality. Agencies...

We show that a platform-pays mechanism can address ratings inflation and ratings shopping with minimum regulatory oversight. While we focus on ratings industry, the mechanism also applies to a setting where firms seek unbiased reports from external auditors. The mechanism has two necessary and...

This article offers a critical overview and analysis of the implications of ESMA's interpretation of the concepts of credit ratings and credit rating agencies underlying ESMA's decisions of 11 July 2018 to fine five Scandinavian banks for issuing credit ratings without being registered as credit...