Journal article
Rating Agencies - An Experimental Analysis of their Remuneration Model



Publication Details
Authors:
Bühren, C.; Pleßner, M.
Publication year:
2015
Journal:
German Economic Review
Pages range:
324-342
Volume number:
16

Abstract
Does it matter who pays for ratings? Yes, but not for the rating agencies' behavior. These are the findings of our experiment where we analyze the effect of the remuneration model of rating agencies on their assessments as well as on investors' and issuers' behavior. First, we find that rating agencies' assessments are comparable whether the agency is (partially) paid by issuers, investors or solely by the experimenter. Issuers, on the other hand, more often do not return investor's trust when they or investors pay for ratings. Further, investors more often act according to the agencies' recommendations when they have to pay for this information.


Authors/Editors

Last updated on 2018-05-11 at 10:41