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| Tekijä: | Ferri, G. Liu, L. |
| Otsikko: | Assessing the effort of rating agencies in emerging economies: Some empirical evidence |
| Lehti: | European Journal of Finance
2005 : JUN, VOL 11:3, p. 283-295 |
| Asiasana: | Finance Investments Credit Risk Agencies Companies |
| Kieli: | eng |
| Tiivistelmä: | Credit rating agencies (RAs) help reduce information asymmetries (here as: info-assymms.) btw. corporate issuers and investors. However, although info-assymms. are more severe in emerging than in developed countries, corporate ratings bestow lower information content in the former. This is a problem since deserving corporations based in emerging countries require that the suitable rating by a major RA be a credible signal to investors. In the study, an indicator is used of RAsÂ’ effort to gather information and test econometrically whether higher effort affects corporate ratings. A negative relationship btw. RAs' effort and corporate ratings is found in developed countries whereas the relationship is positive in emerging countries. While the result for developed countries is coherent with the hypothesis, the result for emerging countries is inconsistent with such hypothesis. This evidence suggests that inducing RAs to raise their effort is desirable for corporations in emerging countries. |
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