Standardising as Governance: The Case of Credit Rating Agencies

Kerwer, Dieter

doi:10.2139/ssrn.269311

Cited by 34 publications

(17 citation statements)

References 28 publications

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“…Ratings institutes like Standard and Poor's and Moody's monitor what they call the creditworthiness of states, municipalities, and major companies around the world (Kerwer, 2002). Some periodicals rank other organizations in a decided attempt to create status orders.…”

Section: Partial Organizationmentioning

confidence: 99%

Organization outside organizations: the significance of partial organization

2010

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It is common practice in organizational research to restrict the concept of organization to formal organizations, and to describe the world outside these entities by such other concepts as institutions or networks. It is argued in this article that the concept of organization can be fruitfully broadened to include some aspects of the order that exists outside and among organizations. A broader concept includes not only complete, formal organization, but also 'partial organization'. Both types of organization are based on decisions, but whereas complete organizations have access to all elements of organization, partial organization is based on only one or a few of these elements. Like complete organization, partial organization is a common phenomenon that not least characterizes much of the contemporary global order. The authors discuss how partial organization arises, how and why institutions and networks sometimes become organized, and the consequences of organization for change, transparency and accountability.

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Section: Partial Organizationmentioning

confidence: 99%

Organization outside organizations: the significance of partial organization

2010

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“…However, the reality of credit rating shows that this is a useful simplification at best. Contrary to the standard view, CRAs often do have an impact on the structure and strategy of borrowers, and furthermore, borrowers find it exceedingly difficult to escape this influence (Kerwer;Sinclair 1994Sinclair , 1999.…”

Section: How Credit Rating Agencies Enhance Accountabilitymentioning

confidence: 89%

Holding Global Regulators Accountable: The Case of Credit Rating Agencies

Kerwer

2005

Governance

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Credit Rating Agencies (CRAs) are private nonmajoritarian regulators (NMRs) of international capital markets. Ratings of creditworthiness are ubiquitous in financial markets, and in this way they exercise considerable control over the flow of credit. CRAs entail a puzzle for the question of the legitimacy of global regulation. As profit seeking firms, they lack a formal element of coercion. Yet, CRAs are often criticized for wielding illegitimate power. Furthermore, the broad demand for accountability has not had a great effect on how CRAs operate. Thus, there is a persistent mismatch between demand and supply of accountability, an "accountability gap." By analyzing the accountability gap, this article seeks to enhance the understanding of the nature and the scope of the legitimacy problems of global NMRs. CRAs suggest that the legitimacy problems of global governance extend beyond formal NMRs to informal NMRs and that solutions sometimes are elusive.

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“…Yet to appear scientific and objectivenecessary for legitimacytechnical expertise mediates this representational process of surveillance as regulation to compensate for inconsistencies; which helps immunise and depoliticise the process (Miller 2001). CRAs mute the unique status of sovereigns in order to make their budgetary relations more tractable to the rational choice methodology and stress tests implicit in their propriety models (Kerwer 2002;Sinclair 2005, 139). Similar to corporates, risk scenarios are coupled with comparative metrics and rating transition matrices parameterised to assess current deviance and future rating changes.…”

Section: Rating Sovereign Debtmentioning

confidence: 99%

The Struggle to Perform the Political Economy of Creditworthiness

Paudyn¹

2015

Journal of Cultural Economy

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Analysing the European Union's regulatory response in the wake of the credit and sovereign debt crises, this paper argues how its adoption of risk management as the core strategy for governing the credit ratings space may undermine European efforts to rebalance the growing asymmetry between private expertise and public democracy. While centralised oversight, enhanced transparency and restorative, technical intervention seem like sound regulatory initiatives, I problematise the methodologies, models and assumptions of sovereign ratings to show how the new ratings framework may actually impede the ability of the technocratic European Securities and Markets Authority (ESMA) to redress the most egregious deficiencies of ratings. Drawing on the performativity of market relations, the paper argues how ESMA's supervisory conflicts undermine the EU's capacity to perform an alternative political economy of limits. Neither is it democratically sanctioned to interfere in the analytical substance of ratings nor should it distort the social facticity of creditworthiness by relying primarily on quantitative risk analysis, ESMA will be forced to either repoliticise the ratings process or promote the status quo, which diminishes fiscal sovereignty.

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Standardising as Governance: The Case of Credit Rating Agencies

Cited by 34 publications

References 28 publications

Organization outside organizations: the significance of partial organization

Organization outside organizations: the significance of partial organization

Holding Global Regulators Accountable: The Case of Credit Rating Agencies

The Struggle to Perform the Political Economy of Creditworthiness

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