Do managers withhold bad news from credit rating agencies?

Minkwan Ahn, Samuel B. Bonsall, Andrew Van Buskirk

Research output: Contribution to journalArticlepeer-review

10 Scopus citations


Research documents that managers, on average, withhold bad news and emphasize good news in their public disclosures. We ask whether the same is true in their private communications with credit rating agencies. We study how rating agencies anticipate and react to public information events as a function of their access to rated firms’ private information. We show that, in terms of ratings downgrades, rating agencies exhibit relatively more anticipation and less reaction to negative (compared to positive) public information events when they have more access to private information. Our results are strongest when firms are most optimistic in their public disclosures and are not due to rating agencies focusing their efforts on downside risk. Overall, we find consistent evidence that rated firms provide less optimistic information to rating agencies in their private communications and that this information is reflected in credit ratings.

Original languageEnglish (US)
Pages (from-to)972-1021
Number of pages50
JournalReview of Accounting Studies
Issue number3
StatePublished - Sep 15 2019

All Science Journal Classification (ASJC) codes

  • Accounting
  • General Business, Management and Accounting


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