Unsolicited credit ratings are issued solely by the discretion of rating agencies based on public information. We develop a model and analyze rms' incentives to solicit credit ratings to signal their quality and a rating agency's incentive to issue unsolicited ratings. We derive conditions for two equilibiria that are likely consequences of two alternative rating fee schemes. When the rating agency is compensated for the accuracy of ratings under
the subscriber-fee scheme, a quasi-separating equilibrium is likely to occur, in which firm quality is revealed through unsolicited ratings. When the rating agency is compensated only for solicited ratings under the issuer-fee scheme, a separating equilibrium results, in which high-quality rms signal through solicited ratings while low-quality firms are revealed through unsolicited ratings. We show that the rating agency has a strong incentive to selectively issue unsolicited ratings to induce more fee-based solicited ratings under the issuer-fee scheme.
JEL Classification: G10 G14 G15
Keywords: Unsolicited rating; Asymmetric information; Signaling
학회소식
공지사항
[2011년 제 4차] Information Content of Unsolicited Credit Ratings a
작성자 : 관리자
조회수 : 1038
게시일 :
2011-12-07