Are watch procedures a critical informational event in the credit ratings process? An empirical investigation

Chan, H; Faff, R; Hill, P; Scheule, H

Are watch procedures a critical informational event in the credit ratings process? An empirical investigation

Chan, H Faff, R Hill, P Scheule, H

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Publication Type:: Journal Article
Citation:: Journal of Financial Research, 2011, 34 (4), pp. 617 - 640
Issue Date:: 2011-12-01

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Field	Value	Language
dc.contributor.author	Chan, H	en_US
dc.contributor.author	Faff, R	en_US
dc.contributor.author	Hill, P	en_US
dc.contributor.author	Scheule, H https://orcid.org/0000-0001-7283-5654	en_US
dc.date.issued	2011-12-01	en_US
dc.identifier.citation	Journal of Financial Research, 2011, 34 (4), pp. 617 - 640	en_US
dc.identifier.issn	0270-2592	en_US
dc.identifier.uri	http://hdl.handle.net/10453/29191
dc.description.abstract	The Boot, Milbourn, and Schmeits (2006) model (Boot model) predicts certain credit rating events are likely to be more informative than others and that credit watch procedures are an important driver of such differences. We test the core empirical predictions of their model. Our sample comprises U.S. corporate issuer credit ratings provided by Moody's, 1990-2006. Our findings fail to uncover compelling evidence for the empirical predictions of the Boot model in relation to the role of watch procedures as coordinating mechanisms. Rather, our findings are more supportive of the view that rating agencies are always at an informational advantage relative to investors. © 2011 The Southern Finance Association and the Southwestern Finance Association.	en_US
dc.relation.ispartof	Journal of Financial Research	en_US
dc.relation.isbasedon	10.1111/j.1475-6803.2011.01304.x	en_US
dc.subject.classification	Finance	en_US
dc.title	Are watch procedures a critical informational event in the credit ratings process? An empirical investigation	en_US
dc.type	Journal Article
utslib.citation.volume	4	en_US
utslib.citation.volume	34	en_US
utslib.for	1502 Banking, Finance and Investment	en_US
utslib.for	1501 Accounting, Auditing and Accountability	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Finance Discipline
pubs.organisational-group	/University of Technology Sydney/Strength - QFRC - Quantitative Finance Research Centre
utslib.copyright.status	closed_access
pubs.issue	4	en_US
pubs.publication-status	Published	en_US
pubs.volume	34	en_US

Abstract:

The Boot, Milbourn, and Schmeits (2006) model (Boot model) predicts certain credit rating events are likely to be more informative than others and that credit watch procedures are an important driver of such differences. We test the core empirical predictions of their model. Our sample comprises U.S. corporate issuer credit ratings provided by Moody's, 1990-2006. Our findings fail to uncover compelling evidence for the empirical predictions of the Boot model in relation to the role of watch procedures as coordinating mechanisms. Rather, our findings are more supportive of the view that rating agencies are always at an informational advantage relative to investors. © 2011 The Southern Finance Association and the Southwestern Finance Association.

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http://hdl.handle.net/10453/29191