graph-163509_1280New findings by Dr. Al Ghosh that are being published in the The Journal of Money, Credit, and Banking.

Synopsis: Credit rating agencies have faced renewed criticism following the recent financial crisis. Critics argue that the issuer-pay model creates significant conflicts of interest thereby leading to inflated credit ratings. Contrary to the popular expectations that nationally recognized credit rating organizations (NRSROs) inflate their ratings, we find that rating agencies are more conservative when rating foreign bonds compared to U.S. domestic firms which consistent with rating agencies being more conservative in their ratings when faced with high information asymmetry.

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