Rating Agency Fees: Pay to Play in Public Finance?

Abstract We examine the relationship between credit rating levels and rating agency fees in a public finance market in which rating agencies earn lower fees and face higher disclosure requirements relative to corporate bond and structured finance markets. Controlling for variation in the complexity...

Ausführliche Beschreibung

Gespeichert in:

Bibliographische Detailangaben
Veröffentlicht in:	The Review of financial studies 2023-05, Vol.36 (5), p.2004-2045
Hauptverfasser:	Cornaggia, Jess, Cornaggia, Kimberly J, Israelsen, Ryan
Format:	Artikel
Sprache:	eng
Schlagworte:	1998-2000 Gebühr Kommunalobligation Kreditwürdigkeit Texas Unternehmenspublizität USA
Online-Zugang:	Volltext
Tags:	Tag hinzufügen Keine Tags, Fügen Sie den ersten Tag hinzu!

container_end_page	2045
container_issue	5
container_start_page	2004
container_title	The Review of financial studies
container_volume	36
creator	Cornaggia, Jess Cornaggia, Kimberly J Israelsen, Ryan
description	Abstract We examine the relationship between credit rating levels and rating agency fees in a public finance market in which rating agencies earn lower fees and face higher disclosure requirements relative to corporate bond and structured finance markets. Controlling for variation in the complexity of credit analysis at the issue level, we find evidence that rating agency conflicts of interest distort credit ratings in the municipal bond market. Unexpectedly expensive ratings are more likely downgraded, and inexpensive ratings are more likely upgraded. The relationship between credit ratings and rating agency fees is driven by issuers who lose access to AAA insurance.
doi_str_mv	10.1093/rfs/hhac073
format	Article
fullrecord	<record><control><sourceid>oup_cross</sourceid><recordid>TN_cdi_crossref_primary_10_1093_rfs_hhac073</recordid><sourceformat>XML</sourceformat><sourcesystem>PC</sourcesystem><oup_id>10.1093/rfs/hhac073</oup_id><sourcerecordid>10.1093/rfs/hhac073</sourcerecordid><originalsourceid>FETCH-LOGICAL-c354t-b65d4f137b27cc1d937f665377139b19f1f4d71620ff6a0d32c50dc50b0368d3</originalsourceid><addsrcrecordid>eNp9j09LwzAchoMoWKcnv0BOXqTul-Zf40XGWFUYWGT3kqbJFqntaLpDv72RDrx5eHkvDy_vg9A9gScCii4HF5aHgzYg6QVKCBM8lVTklyiBXNFUMc6u0U0IXwBAKIMEZZ969N0er_a2MxMurA3PuNQTHntctrF9h8tT3XqDC9_pztiXW3TldBvs3bkXaFdsduu3dPvx-r5ebVNDORvTWvCGOUJlnUljSKOodEJwKiWhqibKEccaSUQGzgkNDc0Mhyamhni5oQv0OM-aoQ9hsK46Dv5bD1NFoPq1raJtdbaNNJ5pa_rOhz8250xKEBmLyMOM9Kfjv1s_soJeMQ</addsrcrecordid><sourcetype>Aggregation Database</sourcetype><iscdi>true</iscdi><recordtype>article</recordtype></control><display><type>article</type><title>Rating Agency Fees: Pay to Play in Public Finance?</title><source>Oxford University Press Journals All Titles (1996-Current)</source><source>EBSCOhost Business Source Complete</source><creator>Cornaggia, Jess ; Cornaggia, Kimberly J ; Israelsen, Ryan</creator><creatorcontrib>Cornaggia, Jess ; Cornaggia, Kimberly J ; Israelsen, Ryan</creatorcontrib><description>Abstract We examine the relationship between credit rating levels and rating agency fees in a public finance market in which rating agencies earn lower fees and face higher disclosure requirements relative to corporate bond and structured finance markets. Controlling for variation in the complexity of credit analysis at the issue level, we find evidence that rating agency conflicts of interest distort credit ratings in the municipal bond market. Unexpectedly expensive ratings are more likely downgraded, and inexpensive ratings are more likely upgraded. The relationship between credit ratings and rating agency fees is driven by issuers who lose access to AAA insurance.</description><identifier>ISSN: 0893-9454</identifier><identifier>EISSN: 1465-7368</identifier><identifier>DOI: 10.1093/rfs/hhac073</identifier><language>eng</language><publisher>Oxford University Press</publisher><subject>1998-2000 ; Gebühr ; Kommunalobligation ; Kreditwürdigkeit ; Texas ; Unternehmenspublizität ; USA</subject><ispartof>The Review of financial studies, 2023-05, Vol.36 (5), p.2004-2045</ispartof><rights>The Author(s) 2022. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For permissions, please e-mail: journals.permissions@oup.com . 2022</rights><lds50>peer_reviewed</lds50><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c354t-b65d4f137b27cc1d937f665377139b19f1f4d71620ff6a0d32c50dc50b0368d3</citedby><cites>FETCH-LOGICAL-c354t-b65d4f137b27cc1d937f665377139b19f1f4d71620ff6a0d32c50dc50b0368d3</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><link.rule.ids>314,776,780,1578,27901,27902</link.rule.ids></links><search><creatorcontrib>Cornaggia, Jess</creatorcontrib><creatorcontrib>Cornaggia, Kimberly J</creatorcontrib><creatorcontrib>Israelsen, Ryan</creatorcontrib><title>Rating Agency Fees: Pay to Play in Public Finance?</title><title>The Review of financial studies</title><description>Abstract We examine the relationship between credit rating levels and rating agency fees in a public finance market in which rating agencies earn lower fees and face higher disclosure requirements relative to corporate bond and structured finance markets. Controlling for variation in the complexity of credit analysis at the issue level, we find evidence that rating agency conflicts of interest distort credit ratings in the municipal bond market. Unexpectedly expensive ratings are more likely downgraded, and inexpensive ratings are more likely upgraded. The relationship between credit ratings and rating agency fees is driven by issuers who lose access to AAA insurance.</description><subject>1998-2000</subject><subject>Gebühr</subject><subject>Kommunalobligation</subject><subject>Kreditwürdigkeit</subject><subject>Texas</subject><subject>Unternehmenspublizität</subject><subject>USA</subject><issn>0893-9454</issn><issn>1465-7368</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2023</creationdate><recordtype>article</recordtype><recordid>eNp9j09LwzAchoMoWKcnv0BOXqTul-Zf40XGWFUYWGT3kqbJFqntaLpDv72RDrx5eHkvDy_vg9A9gScCii4HF5aHgzYg6QVKCBM8lVTklyiBXNFUMc6u0U0IXwBAKIMEZZ969N0er_a2MxMurA3PuNQTHntctrF9h8tT3XqDC9_pztiXW3TldBvs3bkXaFdsduu3dPvx-r5ebVNDORvTWvCGOUJlnUljSKOodEJwKiWhqibKEccaSUQGzgkNDc0Mhyamhni5oQv0OM-aoQ9hsK46Dv5bD1NFoPq1raJtdbaNNJ5pa_rOhz8250xKEBmLyMOM9Kfjv1s_soJeMQ</recordid><startdate>20230501</startdate><enddate>20230501</enddate><creator>Cornaggia, Jess</creator><creator>Cornaggia, Kimberly J</creator><creator>Israelsen, Ryan</creator><general>Oxford University Press</general><scope>OQ6</scope><scope>AAYXX</scope><scope>CITATION</scope></search><sort><creationdate>20230501</creationdate><title>Rating Agency Fees: Pay to Play in Public Finance?</title><author>Cornaggia, Jess ; Cornaggia, Kimberly J ; Israelsen, Ryan</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c354t-b65d4f137b27cc1d937f665377139b19f1f4d71620ff6a0d32c50dc50b0368d3</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2023</creationdate><topic>1998-2000</topic><topic>Gebühr</topic><topic>Kommunalobligation</topic><topic>Kreditwürdigkeit</topic><topic>Texas</topic><topic>Unternehmenspublizität</topic><topic>USA</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Cornaggia, Jess</creatorcontrib><creatorcontrib>Cornaggia, Kimberly J</creatorcontrib><creatorcontrib>Israelsen, Ryan</creatorcontrib><collection>ECONIS</collection><collection>CrossRef</collection><jtitle>The Review of financial studies</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Cornaggia, Jess</au><au>Cornaggia, Kimberly J</au><au>Israelsen, Ryan</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Rating Agency Fees: Pay to Play in Public Finance?</atitle><jtitle>The Review of financial studies</jtitle><date>2023-05-01</date><risdate>2023</risdate><volume>36</volume><issue>5</issue><spage>2004</spage><epage>2045</epage><pages>2004-2045</pages><issn>0893-9454</issn><eissn>1465-7368</eissn><abstract>Abstract We examine the relationship between credit rating levels and rating agency fees in a public finance market in which rating agencies earn lower fees and face higher disclosure requirements relative to corporate bond and structured finance markets. Controlling for variation in the complexity of credit analysis at the issue level, we find evidence that rating agency conflicts of interest distort credit ratings in the municipal bond market. Unexpectedly expensive ratings are more likely downgraded, and inexpensive ratings are more likely upgraded. The relationship between credit ratings and rating agency fees is driven by issuers who lose access to AAA insurance.</abstract><pub>Oxford University Press</pub><doi>10.1093/rfs/hhac073</doi><tpages>42</tpages></addata></record>
fulltext	fulltext
identifier	ISSN: 0893-9454
ispartof	The Review of financial studies, 2023-05, Vol.36 (5), p.2004-2045
issn	0893-9454 1465-7368
language	eng
recordid	cdi_crossref_primary_10_1093_rfs_hhac073
source	Oxford University Press Journals All Titles (1996-Current); EBSCOhost Business Source Complete
subjects	1998-2000 Gebühr Kommunalobligation Kreditwürdigkeit Texas Unternehmenspublizität USA
title	Rating Agency Fees: Pay to Play in Public Finance?
url	https://sfx.bib-bvb.de/sfx_tum?ctx_ver=Z39.88-2004&ctx_enc=info:ofi/enc:UTF-8&ctx_tim=2025-02-06T16%3A38%3A22IST&url_ver=Z39.88-2004&url_ctx_fmt=infofi/fmt:kev:mtx:ctx&rfr_id=info:sid/primo.exlibrisgroup.com:primo3-Article-oup_cross&rft_val_fmt=info:ofi/fmt:kev:mtx:journal&rft.genre=article&rft.atitle=Rating%20Agency%20Fees:%20Pay%20to%20Play%20in%20Public%20Finance?&rft.jtitle=The%20Review%20of%20financial%20studies&rft.au=Cornaggia,%20Jess&rft.date=2023-05-01&rft.volume=36&rft.issue=5&rft.spage=2004&rft.epage=2045&rft.pages=2004-2045&rft.issn=0893-9454&rft.eissn=1465-7368&rft_id=info:doi/10.1093/rfs/hhac073&rft_dat=%3Coup_cross%3E10.1093/rfs/hhac073%3C/oup_cross%3E%3Curl%3E%3C/url%3E&disable_directlink=true&sfx.directlink=off&sfx.report_link=0&rft_id=info:oai/&rft_id=info:pmid/&rft_oup_id=10.1093/rfs/hhac073&rfr_iscdi=true