Weitere Artikel dieser Ausgabe durch Wischen aufrufen
It is [a] scandal that the model of payment for the credit rating agencies has not been changed. They should be paid by agents for the buyers not by the sellers.
Martin Wolf, Financial Times.
The Securities and Exchange Commission (SEC) sanctioned investor-paid rating agency Egan-Jones for falsely stating that it did not know its clients’ investment positions. The SEC’s action against Egan-Jones raises the broad question whether knowledge of clients’ investment positions creates a conflict of interest for investor-paid ratings. In an experimental setting, we find that investor-paid rating agencies are likely to assign credit ratings that are biased in favor of their clients’ positions, and that this effect is attenuated when the rated company has a sophisticated investor base that is expected to scrutinize ratings. The effect is not conditional on the risk profile of the rated companies. Taken together, our findings suggest that a conflict of interest stemming from investors’ preferences is likely to bias ratings under investor-pays business models, but scrutiny by the company’s investor base can counteract this bias.
Bitte loggen Sie sich ein, um Zugang zu diesem Inhalt zu erhalten
Sie möchten Zugang zu diesem Inhalt erhalten? Dann informieren Sie sich jetzt über unsere Produkte:
Alp, A. (2013). Structural shifts in credit rating standards. Journal of Finance, 68(3), 2435–2470. CrossRef
Aronson, E. (1968). Dissonance theory: Progress and problems. In R. P. Abelson, E. Aronson, W. J. McGuire, T. M. Newcomb, M. J. Rosenberg & P. H. Tannenbaum (Eds.), Theories of cognitive consistency: A sourcebook. Chicago: Rand McNally.
Aronson, E., & Carlsmith, J. M. (1962). Performance expectancy as a determinant of actual performance. Journal of Abnormal and Social Psychology, 65, 178–182. CrossRef
Attig, N., Ghoul, E., Guedhami, S., O. and Suh, J. (2013). Corporate social responsibility and credit ratings. Journal of Business Ethics, 117(4), 679–694. CrossRef
Baghai, R. P., & Becker, B. (2018). Non-rating revenue and conflicts of interest. Journal of Financial Economics, 127(1), 94–112. CrossRef
Barsky, A. (2008). Understanding the ethical cost of organizational goal-setting: A review and theory development. Journal of Business Ethics, 81(1), 63–81. CrossRef
Batson, C. D., Collins, E., & Powell, A. A. (2006). Doing business after the fall: The virtue of moral hypocrisy. Journal of Business Ethics, 66(4), 321–335. CrossRef
Becker, B., & Milbourn, T. (2011). How did increased competition affect credit ratings? Journal of Financial Economics, 101(3), 493–514. CrossRef
Blinder, A. (2007) Six fingers of blame in the mortgage mess. New York: New York Times.
Blume, M. E., Lim, F., & Mackinlay, A. C. (1998). The declining credit quality of U.S. corporate debt: Myth or reality? Journal of Finance, 53(4), 1389–1413. CrossRef
Bonner, S. E. (2008). Judgment and decision making in accounting. Upper Saddle River: Pearson Prentice Hall.
Bonsall, I. V. S. B., Koharki, K., & Neamtiu, M. (2016). When do differences in credit rating methodologies matter? Evidence from high information uncertainty borrowers. The Accounting Review, 92(4), 53–79. CrossRef
Brown, C. E., Peecher, M. E., & Solomon, I. (1999). Auditor’s hypothesis testing in diagnostic inference tasks. Journal of Accounting Research, 37(1), 1–26. CrossRef
Brunnermeier, M. K. (2009). Deciphering the liquidity and credit crunch 2007–2008. Journal of Economic Perspectives, 23(1), 77–100. CrossRef
Capps, G., Koonce, L., & Petroni, K. R. (2016). Natural optimism in financial reporting: A state of mind. Accounting Horizons, 30(1), 79–91. CrossRef
CFA Institute (2014). Credit rating agency survey results.
Cornaggia, J., & Cornaggia, K. J. (2013). Estimating the costs of issuer-paid credit ratings. Review of Financial Studies, 26(9), 2229–2269. CrossRef
Dichev, I. D., & Piotroski, J. D. (2001). The long-run stock returns following bond ratings changes. Journal of Finance, 56(1), 173–203. CrossRef
Dimitrov, V., Palia, D., & Tang, L. (2015). Impact of the Dodd–Frank act on credit ratings. Journal of Financial Economics, 115(3), 505–520. CrossRef
Duff, A., & Einig, S. (2015). Debt issuer: Credit rating agency relations and the trinity of solicitude: An empirical study of the role of commitment. Journal of Business Ethics, 129(3), 553–569. CrossRef
Egan-Jones Ratings Company (2003). Response to U.S. Securities and Exchange Commission Concept Release: Rating Agencies and the Use of Credit Ratings under the Federal Securities Laws. Re.: NRSRO Concept Release regarding NRSRO Rating Firms (File No. S7-12-03). Retrieved July 1, 2017, from https://www.sec.gov/rules/concept/s71203/eganjones072803.htm.
Farmer, T. A., Rittenberg, L. E., & Trompeter, G. M. (1987). An investigation of the impact of economic and organizational factors on auditor independence. Auditing: A Journal of Practice & Theory, 7(1), 1–14.
Festinger, L. (1957). A theory of cognitive dissonance. Evanston: Row Peterson.
Festinger, L., & Carlsmith, J. M. (1959). Cognitive consequences of forced compliance. Journal of Abnormal and Social Psychology, 58, 203–210. CrossRef
Financial Crisis Inquiry Commission (2011). The Financial Crisis Inquiry Report.
Fong, K. Y., Hong, H. G., Kacperczyk, M. T., & Kubik, J. D. (2014). Do security analysts discipline credit rating agencies?. Unpublished working paper. University of New South Wales, Columbia University, Imperial College London, and Syracuse University.
Hales, J. (2007). Directional preferences, information processing, and investors’ earnings forecasts. Journal of Accounting Research, 45(3), 607–628. CrossRef
Hand, J. R. M., Holthausen, R. W., & Leftwich, R. W. (1992). The effect of bond rating agency announcements on bond and stock prices. Journal of Finance, 47(2), 733–752. CrossRef
Holthausen, R. W., & Leftwich, R. W. (1986). The effect of bond rating changes on common stock prices. Journal of Financial Economics, 17(1), 57–89. CrossRef
Irani, R. M., & Oesch, D. (2016). Analyst coverage and real earnings management: Quasi-experimental evidence. Journal of Financial and Quantitative Analysis, 51(2), 589–627. CrossRef
Jaggi, B., & Tang, L. (2017). Geographic location of the firm and credit rating accuracy. Journal of Accounting, Auditing & Finance, 32(2), 155–181. CrossRef
Jiang, J., Stanford, M., & Xie, Y. (2012). Does it matter who pays for bond ratings? Historical evidence. Journal of Financial Economics, 105(3), 607–621. CrossRef
Jollineau, S. J., Tanlu, L. J., & Winn, A. (2014). Evaluating proposed remedies for credit rating agency failures. The Accounting Review, 89(4), 1399–1420. CrossRef
Kadous, K., Kennedy, J., & Peecher, M. E. (2003). The effect of quality assessment and directional goal commitment on auditors’ acceptance of client-preferred accounting methods. The Accounting Review, 78(3), 759–778. CrossRef
Kadous, K., Magro, A. M., & Spilker, B. C. (2008). Do effects of client preference on accounting professionals’ information search and subsequent judgments persist with high practice risk? The Accounting Review, 83(1), 133–156. CrossRef
Kedia, S., Rajgopal, S., & Zhou, X. (2014). Did going public impair Moody’s credit ratings? Journal of Financial Economics, 114(2), 293–315. CrossRef
Kedia, S., Rajgopal, S., & Zhou, X. (2017). Large shareholders and credit ratings. Journal of Financial Economics, 124(3), 632–653. CrossRef
Kish-Gephart, J., Detert, J., Treviño, L. K., Baker, V., & Martin, S. (2014). Situational moral disengagement: Can the effects of self-interest be mitigated? Journal of Business Ethics, 125(2), 267–285. CrossRef
Kliger, D., & Sarig, O. (2000). The information value of bond ratings. Journal of Finance, 55(6), 2879–2902. CrossRef
Kunda, Z. (1990). The case for motivated reasoning. Psychological Bulletin, 108(3), 480–498. CrossRef
Kunda, Z. (1992). Can dissonance theory do it all? Psychological Inquiry, 3(4), 337–339. CrossRef
Kunda, Z. (1999). Social cognition: Making sense of people. Cambridge: The MIT Press.
Lerner, J. S., & Tetlock, P. E. (1999). Accounting for the effects of accountability. Psychological Bulletin, 125, 255–275. CrossRef
Liu, P., Seyyed, F. J., & Smith, S. D. (1999). The independent impact of credit rating changes—the case of Moody’s rating refinement on yield premiums. Journal of Business Finance & Accounting, 26(3-4), 337–363. CrossRef
Loh, R., & Stulz, R. M. (2018). Is sell-side research more valuable in bad times? Journal of Finance, 73(3), 959–1013. CrossRef
Moore, D. A., Tetlock, P. E., Tanlu, L., & Bazerman, M. H. (2006). Conflicts of interest and the case of auditor independence: Moral seduction and strategic issue cycling. Academy of Management Review, 31(1), 10–29. CrossRef
Peecher, M. E. (1996). The influence of auditors’ justification processes on their decisions: A cognitive model and experimental evidence. Journal of Accounting Research, 34(1), 125–140. CrossRef
Peytcheva, M., & Gillett, P. R. (2011). How partners’ views influence auditor judgment. Auditing: A Journal of Practice & Theory, 30(4), 285–301. CrossRef
Piercey, M. D. (2009). Motivated reasoning and verbal vs. numerical probability assessment: Evidence from an accounting context. Organizational Behavior and Human Decision Processes, 108(2), 330–341. CrossRef
Piercey, M. D. (2011). Documentation requirements and quantified versus qualitative audit risk assessments. Auditing: A Journal of Practice & Theory, 30(4), 223–248. CrossRef
Scalet, S., & Kelly, T. F. (2012). The ethics of credit rating agencies: what happened and the way forward. Journal of Business Ethics, 111(4), 477–490. CrossRef
Securities and Exchange Commission (2012). Report to Congress on Assigned Credit Ratings.
Stiglitz, J. (2008). Quoted in “Bringing down Wall Street as ratings let loose subprime scourge”. New York: Bloomberg.
Tang, L., & Li, P. (2017). Are investors fixated on credit ratings? Evidence from the municipal bond market. Unpublished working paper. Lehigh University and Southwestern University of Finance and Economics.
Tang, T. T. (2009). Information asymmetry and firms’ credit market access: Evidence from Moody’s credit rating format refinement. Journal of Financial Economics, 93(2), 325–351. CrossRef
Tetlock, P. E. (1985). Accountability: The neglected social context of judgment and choice. Research in Organizational Behavior, 7, 297–332.
Tetlock, P. E. (1992). The impact of accountability on judgment and choice: Toward a social contingency model. Advances in Experimental Social Psychology, 25, 331–376. CrossRef
Thayer, J. (2011). Determinants of investors’ information acquisition: Credibility and confirmation. The Accounting Review, 86(1), 1–22. CrossRef
Wilks, T. J. (2002). Predecisional distortion of evidence as a consequence of real-time audit review. The Accounting Review, 77(1), 51–72. CrossRef
Xia, H. (2014). Can investor-paid credit rating agencies improve the information quality of issuer-paid rating agencies? Journal of Financial Economics, 111(2), 450–468. CrossRef
Xia, H., & Strobl, G. (2012). The issuer-pays rating model and ratings inflation: Evidence from corporate credit ratings. Unpublished working paper. Frankfurt School of Finance and Management and University of Texas at Dallas.
- Investor-Paid Ratings and Conflicts of Interest
- Springer Netherlands
Journal of Business Ethics
Print ISSN: 0167-4544
Elektronische ISSN: 1573-0697
Neuer Inhalt/© Stellmach, Neuer Inhalt/© Maturus, Pluta Logo/© Pluta, digitale Transformation/© Maksym Yemelyanov | Fotolia