Does regulatory certification affect the information content of credit ratings?

Research output: Contribution to journalArticlepeer-review

43 Scopus citations


We exploit an investor-paid rating agency's designation as a Nationally Recognized Statistical Rating Organization (NRSRO) to test whether this certification affects the agency's information production. We use a certified issuer-paid agency as a benchmark and find robust evidence that the investor-paid agency's ratings policy - both timelier and more symmetric with respect to positive and negative information - persists after it became certified for regulatory compliance. Our results suggest that ratings policy is more a function of rating agency compensation structure than the NRSRO certification by the U.S. Securities and Exchange Commission.

Original languageEnglish (US)
Pages (from-to)1578-1597
Number of pages20
JournalManagement Science
Issue number6
StatePublished - Jun 2016

All Science Journal Classification (ASJC) codes

  • Strategy and Management
  • Management Science and Operations Research


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