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Rating Agencies – An Experimental Analysis of Their Remuneration Model
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Christoph Bühren
Published/Copyright:
November 30, 2019
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.
Published Online: 2019-11-30
Published in Print: 2015-08-01
© 2019 by Walter de Gruyter Berlin/Boston
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Articles in the same Issue
- Don’t Tax Me? Determinants of Individual Attitudes Toward Progressive Taxation
- Same Same But Different: Dialects and Trade
- The Costs of Power Interruptions in Germany: A Regional and Sectoral Analysis
- Rating Agencies – An Experimental Analysis of Their Remuneration Model
- Intrinsic Motivations of Public Sector Employees: Evidence for Germany
- The Price Impact of Lending Relationships
