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A Closer Look at Credt Rating Processes: Uncovering the Impact of Analyst Rotation

Author

Listed:
  • Kilian R. Dinkelaker

    ()

  • Andreas-Walter Mattig

    ()

  • Stefan Morkoetter

    ()

Abstract

We investigate the effect of credit analyst rotation in the context of long-term ratings of S&P 500 issuers between 2002 and 2015. We find that analyst rotation in the coverage of issuers is associated with higher rating activity and a lower credit risk assessment (e.g., rating downgrades) following the appointment of a new credit analyst. Our results provide empirical support for policies relating to mandatory credit analyst rotation programs.

Suggested Citation

  • Kilian R. Dinkelaker & Andreas-Walter Mattig & Stefan Morkoetter, 2019. "A Closer Look at Credt Rating Processes: Uncovering the Impact of Analyst Rotation," Working Papers on Finance 1911, University of St. Gallen, School of Finance.
  • Handle: RePEc:usg:sfwpfi:2019:11
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    File URL: http://ux-tauri.unisg.ch/RePEc/usg/sfwpfi/WPF-1911.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Rating agencies; credit ratings; credit analysts; rotation policy; analyst bias;

    JEL classification:

    • 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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