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Do personal connections improve sovereign credit ratings?

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  • Klusak, Patrycja
  • Thornton, John
  • Uymaz, Yurtsev

Abstract

In a large sample of sovereign debt issues, we show that a personal connection between senior executives in credit rating agencies and leading politicians in the sovereign results in an improved rating. A test on bond yields suggest that the personal connection reflects a favorable treatment of the issuer.

Suggested Citation

  • Klusak, Patrycja & Thornton, John & Uymaz, Yurtsev, 2020. "Do personal connections improve sovereign credit ratings?," Finance Research Letters, Elsevier, vol. 33(C).
    • Handle: RePEc:eee:finlet:v:33:y:2020:i:c:s1544612319302661
    DOI: 10.1016/j.frl.2019.05.012
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    More about this item

    Keywords

    Personal connections; Sovereign credit ratings; Information asymmetries;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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