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Credible Credit Raters?: An Analysis of Credit Rating Actions in the American Financial Markets

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dc.contributor.advisor Ghosh, Indradeep
dc.contributor.author Bostick, Andrew
dc.date.accessioned 2012-06-04T17:49:37Z
dc.date.available 2012-06-04T17:49:37Z
dc.date.issued 2012
dc.identifier.uri http://hdl.handle.net/10066/8150
dc.description.abstract To what extent do the credit rating agencies play a meaningful role in the American financial markets, and how has the 2008 Financial Crisis affected that role? To answer both of these questions, this study applies an Ordinary Least Squares regression analysis and an Abnormal Returns event study to a panel data set that contains the credit rating actions and asset returns (bond and stock) for a sample of fifty five corporations traded on the New York Stock Exchange from 2005 to 2011. The major findings are three-fold: credit rating agencies play a significant role in the bond market, as downgrades lead to large increases in bond spreads; the agencies’ role in the stock market is ambiguous; and, the Financial Crisis lead to a greater effect of downgrades on bond spreads. Though the paper’s framing premise is that the credit raters are not “credible”—given their recent mishandling of the mortgage-backed security industry—the findings suggest that raters’ actions actually take on more significance following the 2008 Financial Crisis.
dc.description.sponsorship Haverford College. Department of Economics
dc.language.iso eng
dc.rights.uri http://creativecommons.org/licenses/by-nc/3.0/us/
dc.subject.lcsh Financial crises -- United States -- 21st century
dc.subject.lcsh Finance -- United States
dc.subject.lcsh Credit ratings -- United States
dc.title Credible Credit Raters?: An Analysis of Credit Rating Actions in the American Financial Markets
dc.type Thesis
dc.rights.access Open Access


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http://creativecommons.org/licenses/by-nc/3.0/us/ Except where otherwise noted, this item's license is described as http://creativecommons.org/licenses/by-nc/3.0/us/

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