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Credit ratings and disclosure channels

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  • Heflin, Frank
  • Shaw, Kenneth W.
  • Wild, John J.

Abstract

We study the relation between analysts’ ratings of firms’ credit worthiness and ratings of the quality of firms’ (1) annual report disclosures, (2) quarterly and other disclosures, and (3) manager-analyst communications. We find that credit ratings are better for firms with higher rated annual report disclosures. We also find that marked increases in analyst ratings of annual report quality are accompanied by improvements in credit ratings. We find no relation between credit ratings and analysts’ ratings of either quarterly report disclosures or management-analyst communications. Overall, the results suggest that a commitment to better annual report disclosure is related to a lower cost of credit capital.

Suggested Citation

  • Heflin, Frank & Shaw, Kenneth W. & Wild, John J., 2011. "Credit ratings and disclosure channels," Research in Accounting Regulation, Elsevier, vol. 23(1), pages 20-33.
    • Handle: RePEc:eee:reacre:v:23:y:2011:i:1:p:20-33
    DOI: 10.1016/j.racreg.2011.03.004
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    4. Bertrand K Hassani & Xin Zhao, 2014. "Reconsidering Corporate Ratings," Documents de travail du Centre d'Economie de la Sorbonne 14077, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    5. Bauman, Mark P., 2013. "The adequacy of fixed asset disclosures under U.S. GAAP," Research in Accounting Regulation, Elsevier, vol. 25(2), pages 149-156.
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    7. Bertrand Hassani & Xin Zhao, 2014. "Reconsidering Corporate Ratings," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01117683, HAL.
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