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Are watch procedures a critical informational event in the credit ratings process? : an empirical investigation

Chan, Howard and Faff, Robert and Hill, Paula and Scheule, Harald (2011) Are watch procedures a critical informational event in the credit ratings process? : an empirical investigation. Journal of Financial Research, 34 (4). pp. 617-640. ISSN 0270-2592

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Abstract

The Boot, Milbourn, and Schmeits (2006) model (Boot model) predicts certain credit rating events are likely to be more informative than others and that credit watch procedures are an important driver of such differences. We test the core empirical predictions of their model. Our sample comprises U.S. corporate issuer credit ratings provided by Moody's, 1990–2006. Our findings fail to uncover compelling evidence for the empirical predictions of the Boot model in relation to the role of watch procedures as coordinating mechanisms. Rather, our findings are more supportive of the view that rating agencies are always at an informational advantage relative to investors.

Item type: Article
ID code: 41691
Keywords: Boot model, credit ratings, credit watch procedures, Accounting, Finance, Accounting
Subjects: Social Sciences > Commerce > Accounting
Department: Strathclyde Business School > Accounting and Finance
Related URLs:
    Depositing user: Pure Administrator
    Date Deposited: 24 Oct 2012 12:59
    Last modified: 05 Sep 2014 18:30
    URI: http://strathprints.strath.ac.uk/id/eprint/41691

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