We analyze the entry of new credit rating agencies into structured finance products. Our setting is unique as we study a period in which the incumbents’ reputation was extremely poor and the benefit of more fee income from inflating ratings was low. We find entrants cater to issuers by issuing higher ratings than incumbents, particularly for interest-only (IO) tranches. Ratings by incumbents be...

Abstract This study investigates the possible nonlinear relationship between working capital and credit rating. Furthermore, it examines three components of (inventory, accounts receivable, payable) a firm’s Employing data for U.S listed firms period 1985 2017, results our ordered probit model show its Finally, we find that deviation from optimal adversely affects The this are significant impor...

The financial crisis has brought a new focus on the accuracy of credit rating agencies (CRAs). In this paper, we highlight the incentives of analysts at the CRAs to provide accurate ratings. We construct a model in which analysts initially work at a CRA and can then either remain or move to a bank. The CRA uses incentive contracts to motivate analysts, but does not capture the benefits if the a...

Th is article examines how ideological diff erences between political offi cials and agencies may have aff ected the implementation of an ostensibly nonpartisan, government-wide administrative initiative: the George W. Bush administration’s Program Assessment Rating Tool (PART) review of federal programs. Th e analysis reveals that managers in agencies associated with liberal programs and emplo...