2013
DOI: 10.2139/ssrn.2230915
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Are Credit Ratings Subjective? The Role of Credit Analysts in Determining Ratings

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Cited by 12 publications
(3 citation statements)
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“…Fracassi, Petry, and Tate (2013) show that credit rating analysts' optimism or pessimism can affect ratings decisions Griffin and Tang (2012). provide evidence of subjectivity in the ratings for CDOs and its consequences for rating accuracy.9 For example, in their 2006 annual report, Textron, Inc. states: "Our credit ratings are predominantly a function of our ability to generate operating cash flow and satisfy certain financial ratios.…”
mentioning
confidence: 99%
“…Fracassi, Petry, and Tate (2013) show that credit rating analysts' optimism or pessimism can affect ratings decisions Griffin and Tang (2012). provide evidence of subjectivity in the ratings for CDOs and its consequences for rating accuracy.9 For example, in their 2006 annual report, Textron, Inc. states: "Our credit ratings are predominantly a function of our ability to generate operating cash flow and satisfy certain financial ratios.…”
mentioning
confidence: 99%
“…However, the heavy involvement of qualitative analyses in all aspects except leverage and coverage criteria is a matter (Griffin & Tang, 2012). A lack of uniformity in ratings due to raters' different conceptions of a project can cause quality problems (Fracassi, Petry, & Tate, 2013). In addition, a heavy expense in time and money caused by complexity in ratings impedes periodic updates.…”
Section: Applications and Limitations Of Previous Studiesmentioning
confidence: 99%
“…Scholars have found a "home bias" in sovereign credit ratings based on the location of the agency (Fuchs and Gehring, 2013) and the home origin of the credit analyst (Cornaggia et al, 2014). In addition, the variance of analyst characteristicssuch as education or how long they have been analystsdistorts ratings (Fracassi et al, 2015). Finally, the credit rating agencies' incentive to increase market share also distorts ratings.…”
Section: Research Design and Analysismentioning
confidence: 99%