Analyst Promotions within Credit Rating Agencies: Accuracy or Bias? / Darren J. Kisgen, Matthew Osborn, Jonathan Reuter.

Format:

Book

Author/Creator:

Kisgen, Darren J.

Contributor:

National Bureau of Economic Research.

Osborn, Matthew.

Reuter, Jonathan.

Series:

Working Paper Series (National Bureau of Economic Research) no. w22477.

NBER working paper series no. w22477

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Analyst Promotions within Credit Rating Agencies

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2016.

Summary:

We examine whether credit rating agencies reward accurate or biased analysts. Using data collected from Moody's corporate debt credit reports, we find that Moody's is more likely to promote analysts who are accurate, but less likely to promote analysts who downgrade frequently. Combined, analysts who are accurate but not overly negative are approximately twice as likely to get promoted. Further, analysts whose rating changes are more informative to the market are more likely to get promoted, unless their ratings changes cause large negative market reactions. Moody's balances a desire for accuracy with a desire to cater to its corporate clients.

Notes:

Print version record

August 2016.