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Rating agencies' track record is good in developed countries but poor in emerging economies. Why? Given the almost-monopolistic structure of the industry, we conjecture that agencies might underinvest in information gathering. We propose an indicator quantifying the agencies' effort to gather information and assess whether greater effort affects rating levels. We detect: (i) absolute underinvestment for non-OECD sovereigns (less effort in spite of greater opaqueness); (ii) relative underinvestment for non-OECD firms compared with OECD ones (though the former receive a larger effort, more intense effort boosts firm ratings in non-OECD countries while depressing them in OECD countries).

Keywords: sovereign risk ; credit ratings ; rating agencies’ effort

Issue Date: 2004-05

Publication Type: Journal Article

DOI and Other Identifiers: Print ISSN 1514-0326 (Other)

Online ISSN 1667-6726 (Other)

PURL Identifier: http://purl.umn.edu/43847 Published in: Journal of Applied Economics, Volume 07, Number 1 Page range: 77-98

Total Pages: 22

JEL Codes: G2; G3

Record appears in: Universidad del CEMA > Journal of Applied Economics





Autor: Ferri, Giovanni

Fuente: http://ageconsearch.umn.edu/record/43847?ln=en







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