The Relation of Voluntary Disclosure and Credit Rating

2015 ◽  
Vol 12 (3) ◽  
pp. 1-19
Author(s):  
이장희 ◽  
정설희
Keyword(s):  
Voluntary Disclosure ◽  
Credit Rating

The Regulatory Role of Credit Ratings and Voluntary Disclosure

2021 ◽  
Author(s):  
Riddha Basu ◽  
James P. Naughton ◽  
Clare Wang
Keyword(s):  
Voluntary Disclosure ◽  
Credit Rating ◽  
Credit Ratings ◽  
Regulatory Role ◽  
Rating Agencies ◽  
Corporate Credit ◽  
Quasi Experimental ◽  
Rating Changes ◽  
Corporate Credit Rating

We find that corporate credit rating changes have an effect on firms' voluntary disclosure behavior that is independent of the information they convey about firm fundamentals. Our analyses exploit two separate quasi-experimental settings that generate either exogenous credit rating downgrades or credit rating upgrades (i.e., credit rating label changes). We find evidence of a negative relation between the direction of the credit rating label change and the provision of voluntary disclosure in both settings-firms respond to exogenous downgrades by increasing voluntary disclosure and to exogenous upgrades by decreasing voluntary disclosure. The effects we document are attributable to the regulatory role rather than the information role of credit ratings. Overall, our analyses indicate that credit rating agencies as gatekeepers influence firms' provision of voluntary disclosure.

Credit coordinate ratings with corresponding credit rating agencies and regulations

2014 ◽  
Vol 01 (01) ◽  
pp. 1450002 ◽  
Author(s):  
Weiping Li
Keyword(s):  
Voluntary Disclosure ◽  
Credit Rating ◽  
Conflicts Of Interest ◽  
Natural Extension ◽  
Necessary Condition ◽  
Credit Rating Agencies ◽  
No Arbitrage ◽  
Absolute Value ◽  
Rating Agencies ◽  
Default Rate

This paper develops a coordinate rating for Credit Rating Agencies (CRAs) in the rating market. We first show that there is a necessary condition for the restructured sub-portfolios to have no-arbitrage principle for coordinate ratings. The coordinate rating is not only a natural extension of a single rating, but also reduces the rating bias and increases the rating accuracy. We solve the voluntary-disclosure decision problem for the issuer in terms of coordinate ratings. Furthermore, we show that the complexities of sub-portfolios do reduce the incentive to shop for the coordinate rating by comparing it with the incentive to shop for a single rating. The correlation among sub-portfolios also affect the incentive to shop in the coordinate rating. We advocate four principles for the credit rating system, from adapting coordinate ratings and reducing conflicts of interest to encouraging competition among CRAs and ensuring incentive alignment. We also build a model with disapproval correlation among CRAs and show that the probability of the joint disapproval is extremely sensitive to the disapproval correlation, even though the correlation may be very small in absolute value. Under an approval arrangement from the regulator in terms of the default rate within a CRA, we show that there exists a sub-game perfect equilibrium in which both approved CRAs provide correct coordinate ratings.

scholarly journals The Effect of Reputation Shocks to Rating Agencies on Corporate Disclosures

2018 ◽  
Vol 94 (1) ◽  
pp. 299-326 ◽  
Author(s):  
Mani Sethuraman
Keyword(s):  
Credit Risk ◽  
Voluntary Disclosure ◽  
Credit Rating ◽  
Credit Ratings ◽  
Earnings Forecasts ◽  
Corporate Bond ◽  
Management Earnings Forecasts ◽  
Rating Agencies ◽  
Theoretical Predictions ◽  
Bond Issuers

ABSTRACT This paper explores the effect of a credit rating agency's (CRA) reputation on the voluntary disclosures of corporate bond issuers. Academics, practitioners, and regulators disagree on the informational role played by major CRAs and the usefulness of credit ratings in influencing investors' perception of the credit risk of bond issuers. Using management earnings forecasts as a measure of voluntary disclosure, I find that investors demand more (less) disclosure from corporate bond issuers when the ratings become less (more) credible. In addition, using content analytics, I find that bond issuers disclose more qualitative information during periods of low CRA reputation to aid investors in assessing credit risk. My findings are consistent with credit ratings providing incremental information to investors and reducing adverse selection in lending markets. Further, consistent with theoretical predictions, my findings suggest that managers rely on voluntary disclosure as a credible mechanism to reduce information asymmetry in bond markets.

A Research on the Relation between Voluntary Disclosure Leveland Downward Cost Behavio

2020 ◽  
Vol 29 (3) ◽  
pp. 1-26
Author(s):  
Hyunuk Jung ◽  
Miyoung Lee
Keyword(s):  
Voluntary Disclosure

What Determines the Voluntary Disclosure of CEO Succession Planning?

2020 ◽  
Vol 45 (5) ◽  
pp. 115-159
Author(s):  
Min Kwan Ahn ◽  
Jeong Hwan Joo
Keyword(s):  
Succession Planning ◽  
Voluntary Disclosure ◽  
Ceo Succession
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