کد مقاله | کد نشریه | سال انتشار | مقاله انگلیسی | نسخه تمام متن |
---|---|---|---|---|
959516 | 929307 | 2012 | 23 صفحه PDF | دانلود رایگان |
![عکس صفحه اول مقاله: Information effect of entry into credit ratings market: The case of insurers' ratings Information effect of entry into credit ratings market: The case of insurers' ratings](/preview/png/959516.png)
The paper analyzes the effect of competition between credit rating agencies (CRAs) on the information content of ratings. We show that a monopolistic CRA pools sellers into multiple rating classes and has partial market coverage. This provides an opportunity for market entry. The entrant designs a rating scale distinct from that of the incumbent. It targets higher-than-average companies in each rating grade of the incumbent's rating scale and employs more stringent rating standards. We use Standard and Poor's (S&P) entry into the market for insurance ratings previously covered by a monopolist, A.M. Best, to empirically test the impact of entry on the information content of ratings. The empirical analysis reveals that S&P required higher standards to assign a rating similar to the one assigned by A.M. Best and that higher-than-average quality insurers in each rating category of A.M. Best chose to receive a second rating from S&P.
Journal: Journal of Financial Economics - Volume 106, Issue 2, November 2012, Pages 308–330