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

Publisher:
Blackwell Publishing Ltd
Publication Type:
Journal Article
Citation:
Journal of Financial Research, 2011, 34 (4), pp. 617 - 640
Issue Date:
2011-01
Full metadata record
Files in This Item:
Filename Description Size
Thumbnail2010006410OK.pdf185.68 kB
Adobe PDF
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 Moodys, 19902006. 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.
Please use this identifier to cite or link to this item: