Publication Type

Journal Article

Version

submittedVersion

Publication Date

6-2019

Abstract

The Dodd–Frank Act (Section 939B) enacted in 2010 repealed the exemption of credit rating agencies (CRAs) from Regulation Fair Disclosure. Testing whether CRAs continue to provide new information to the market after the repeal, the authors find that the significant prerepeal stock price responses to rating changes disappear after the regime change. Bond price reactions, however, remain significant. These results are even more significant at the investment–speculative boundary. Evidence suggests that CRAs served as a conduit for transmitting private information before the repeal and that the continued bond price reactions are likely due to regulations favoring higher-rated bonds.

Keywords

Fixed income and structured finance, information providers/credit ratings

Discipline

Finance and Financial Management | Portfolio and Security Analysis

Research Areas

Finance

Publication

Journal of Fixed Income

Volume

29

Issue

1

First Page

6

Last Page

19

ISSN

1059-8596

Identifier

10.3905/jfi.2019.29.1.006

Publisher

Institutional Investor Inc

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.3905/jfi.2019.29.1.006

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