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Regulating a highly concentrated industry: Implications fromDodd-Frank

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  • Rieber, Alexander

Abstract

Using an international sample of more than 65,000 rating actions by Fitch, Moody's and S&P, we analyze the effect of the Dodd-Frank Act on credit ratings. We document that (i) rating report content changes significantly after Dodd-Frank and (ii) show, by exploiting within firm-quarter variation, that ratings significantly improve after DoddFrank. While ratings are more accurate, updated more frequently, and reflect firm fundamentals more closely, there is no evidence for a decrease in rating stability after Dodd-Frank. Firms, especially constrained firms, benefit and issue more debt after rating agencies' first post Dodd-Frank rating action. For European firms, effects are generally weaker than for U.S. firms

Suggested Citation

  • Rieber, Alexander, 2021. "Regulating a highly concentrated industry: Implications fromDodd-Frank," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242434, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc21:242434
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    References listed on IDEAS

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    More about this item

    Keywords

    Dodd-Frank; Regulation; Cosine Similarity; Credit Rating; Credit Rating Report; Natural Experiment;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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