Unsolicited Versus Solicited: Credit Ratings and Bond Yields

Han, Seung Hun; Moore, William T.; Shin, Yoon S.; Yi, Seongbaek

doi:10.1007/s10693-012-0137-z

Cited by 22 publications

(10 citation statements)

References 25 publications

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“…Following Hovakimian et al (2009), Han et al (2013) and Fairchild et al (2015), the numerical score for each rating for this study is as follows: AAA = 9, P1 = 8, AA = 7, A = 6, BBB = 5, BB = 4, B = 3, C = 2, D = 1. Table II shows Sukuk rating description and score based on RAM and MARC.…”

Section: Dependent Variablesmentioning

confidence: 99%

The effects of board attributes on Sukuk rating

Elhaj

Muhamed

Ramli

2018

IMEFM

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Purpose The purpose of this paper is to investigate the effect of board attributes on Sukuk rating in firms listed in Bursa Malaysia (Malaysian Stock Exchange) during the period of 2008 to 2013. Design/methodology/approach This study uses ordinal logit regression model to examine the influence of board attributes (CEO-chairman duality, board size and board independence) on the dependent variable (RATING). Findings The findings of this paper generally support the agency theory and stakeholder theory. Results show that after controlling for firm characteristics, the Sukuk rating is positively associated with CEO-chairman duality, board size and board independence; and negatively correlated with leverage while positively related to profitability and size. The findings of this study also provide evidence that having two positions in an organization as CEO and chairman could have added higher responsibility towards making corporate decisions and provide better Sukuk rating performance. In addition, findings show that the larger the board size, the better Sukuk rating. Also, higher board independence enjoys higher rating. Research limitations/implications This study was limited to the investigation of the relationship between board attributes (CEO duality, board size and board independence) on Sukuk ratings using aggregate data from 2008 to 2013 among Malaysian Sukuk issuers. Practical implications The findings of this paper describe the impact of board attributes on Sukuk rating in Malaysian Sukuk market which in turn gives the useful insights to many of the actors in the markets such as issuers, investors and policymakers which can be relied upon in making strategic decisions to issue and invest in Islamic bonds in Malaysian market. In addition, the findings could prove to be useful also for regulators because they are responsible for the acceptable level of corporate governance standards. Originality/value This study contributes to the body of knowledge by focusing heavily on enhancing Sukuk ratings by reducing conflict between managers and Sukuk holders in Malaysia. Additionally, this study benefits from the agency theory and stakeholder theory to provide evidence on the effect of board attributes on Sukuk rating.

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Section: Dependent Variablesmentioning

confidence: 99%

The effects of board attributes on Sukuk rating

Elhaj

Muhamed

Ramli

2018

IMEFM

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“…In contrast, there are several studies investigating the relationship between unsolicited ratings and the cost of debt. Using the solicited and unsolicited ratings of S&P in Japan, Han et al. (2012) find that Japanese firms with unsolicited ratings have more asymmetric information and poorer firm quality.…”

Section: Relevant Literaturementioning

confidence: 99%

Rating Agency Reputation, the Global Financial Crisis, and the Cost of Debt

Han¹,

Pagano²,

Shin

2012

Financial Management

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Why do foreign firms obtain credit ratings by global rating agencies rather than from their home country's rating agencies even though global raters typically assign lower credit ratings when these foreign firms issue bonds in their home currencies? We find that bonds rated by a global agency decreased yields 11‐14 basis points (bps) when compared to those rated by Japanese rating agencies but, during the 2007‐2009 financial crisis, the yields on these Japanese bonds increased 12‐17 bps, thus fully negating the advantage of obtaining a bond rating from a global rater. This suggests that the reputation of global rating agencies declined during the 2007‐2009 crisis period.

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“…The ratings issued by the credit rating agencies without the request of the issuers or their agents which is the issuance of non-demand ratings does not include credit rating fees (Chang et al, 2019).…”

Section: Non-demand Ratingmentioning

confidence: 99%

Corporate Governance Rating in Turkey: Investigation of Scores of Firms

OKAN

UĞURLU

2022

İstanbul Ticaret Üniversitesi Sosyal Bilimler Dergisi

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After the corporate governance crisis in 2001, and the crises in the following years increased the concern about the governance of the firms. The concern focused on corporate governance. There were important developments in Turkey related to corporate governance after 2003. The Capital Markets Board of Turkey (CMB) published "Corporate Governance Principles of Turkey" in 2003, and the corporate governance rating agency's rules were published in Official Gazette in 2007. Purpose: Based on these developments, the paper aims to investigate corporate governance rating firms in Turkey and their rating scores. Method: To investigate the rating firms and their scores, annual data are collected from the TKYD website from 2007 to 2010. Because no article comprehensively investigates the data, we use simple descriptive statistics and data visitation methods.Findings: We find two main results. The first one shows that there are two dominant rating companies in Turkey. The second shows that the firms have increasing rating values by year.Originality: In the absence of any comprehensive analysis of Turkey's corporate governance rating firms' rating scores, this article will constitute base information for further research.

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Unsolicited Versus Solicited: Credit Ratings and Bond Yields

Cited by 22 publications

References 25 publications

The effects of board attributes on Sukuk rating

The effects of board attributes on Sukuk rating

Rating Agency Reputation, the Global Financial Crisis, and the Cost of Debt

Corporate Governance Rating in Turkey: Investigation of Scores of Firms

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