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The Effect of Ratings Announcements on Firms in Bank-Based Systems

Kiesel, F. and Schiereck, D. :
The Effect of Ratings Announcements on Firms in Bank-Based Systems.
In: The Journal of Fixed Income, 24 (4) pp. 84-95. ISSN 1059-8596
[Article] , (2015)

Abstract

Rating agencies act as intermediaries for investors in evaluating the creditworthiness of borrowers. The role of ratings agencies is particularly crucial in market-based systems, because, in contrast to long-run bank relationships, outside investors are confronted with greater obstacles to in-depth and reliable evaluations of firm credit risk. The financial intermediation in bank-based systems has implications for the role and the focus of credit rating agencies. This study examines the influence of ratings announcements in Germany, one of the premier bank-based systems. During the study period, from January 2000 through June 2014, we examine 189 Standard & Poor’s and 204 Moody’s ratings announcements. Our results show that ratings announcements are less important in the German market than in market-based systems such as the United States.

Item Type: Article
Erschienen: 2015
Creators: Kiesel, F. and Schiereck, D.
Title: The Effect of Ratings Announcements on Firms in Bank-Based Systems
Language: English
Abstract:

Rating agencies act as intermediaries for investors in evaluating the creditworthiness of borrowers. The role of ratings agencies is particularly crucial in market-based systems, because, in contrast to long-run bank relationships, outside investors are confronted with greater obstacles to in-depth and reliable evaluations of firm credit risk. The financial intermediation in bank-based systems has implications for the role and the focus of credit rating agencies. This study examines the influence of ratings announcements in Germany, one of the premier bank-based systems. During the study period, from January 2000 through June 2014, we examine 189 Standard & Poor’s and 204 Moody’s ratings announcements. Our results show that ratings announcements are less important in the German market than in market-based systems such as the United States.

Journal or Publication Title: The Journal of Fixed Income
Volume: 24
Number: 4
Publisher: Institutional Investor
Divisions: 01 Law and Economics > Betriebswirtschaftliche Fachgebiete > Corporate finance
01 Law and Economics > Betriebswirtschaftliche Fachgebiete
01 Law and Economics
Date Deposited: 02 Apr 2015 13:05
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