133 Ar el vt he onuugeh, iitt md oi eg sh tnsootugnod wa tittrhaoc ut itv et ht eo pr irsokv iodf el ob seitnt eg r rcerpeudti at triaotni n. gI ns vt oe sgt ai gi na tci nu gr r et hnet reputational damage to S&P in their rating of commercial mortgage-backed securities (CMBS), Baghai and Becker (2020) find that CRAs can still regain m ra a ti r n k g e s t . share even if they suffered from reputational damage by issuing better 41 It seems investors in structured products tend to be forgiving in dealings wr eipt hu tCaRt iAo ns . aBt ateh ee te xapl . e(n2s0e1o9f)f us ttautree trheavte snmu ea ltlhCaRn Al asragreeCmR Ao rsea sl i kt heel yy thoa vf oerag oh itghheei rr immomr ee dt oi altoes en ef reodmt oa pd raomt eacgte do rr egpa ui nt amt i oa nr k. eAtf tsehraarlel ,, ruencloi kv ee rlianrgg ef r oCmR Arse pwuht aot ihoanvael damage is expensive, burdensome, and time-consuming. Empirically investigating the trade-off between future income and current income of CRAs, Camanho et al. (2020) find that CRAs are more likely to provide better ratings in a monopoly than in a duopoly. They also suggest that lower entry barriers in the CRA market might increase the level of rating inflation. Similarly, Manso (l e2a0d1i 3n )g s thoo wr ast ti nh ga t da no wi nncgr reaads ee si .n Nc oomt wpiet ht ist ti oa nn dr iensgu l tt sh ei n aarhg iugmh eern nt utmh abte rc oomf dpeef taiut ilot sn, might reduce rating quality, competition may also enhance the effectiveness of the mC RaAr ks ectr e(aHt öe sr nbeern, e2f 0i t0s 2s )u. c Shpaesclief iscsa ml l yi, s ri te phoarst i bn eg e(nR aabragnuaelda nt hdaRt ucdo, m2 0p1e t7i )t i. oOnn ea mo f ot nh ge possible effects of the issuer-pays revenue model is the adjustments, and specifically leoxoasme ni ni ne dg , tohf er aqtui na gl i tsyt aonf dr aa rt di ns gb sy t Ca Rn Ad as .r Td hs e( rsee ea r, ef oar geoxoadmnpul me , bBeercokfesrt ua dn ide sMt hi l abtohuarvne, 2012; Alp, 2013), especially after the large number of mispriced securities t( hf oartc ceadm) ea dt jou sl itgmh te ndtusr ii nn gr taht ien Gg FsCt a. nTdhaersdes CbRyA CsRc aAns d. aFlosr heaxvaemr pe sl eu, l ti end2i0n0s9e, vSe&r aPl apnrondouucntcse(ds utchha ta si t cwo lal as t ea rdaj ul iszteidn gd ei tbst roabtliingga tmi oentshaonddo lRo Mg yBfSo)r. c e r t a i n s t r u c t u re d 41n aTt ihoensael cc roemd pi te rt ea nt itn gasu tahroer int oi et s osnul yc hu saes dbba yn ki navneds t oi nr ss ubrua nt cael s roe bg uy l ar et ogrusl attoo rdseitne rtmh ei nUe nciat epdi t aSlt arteeqsuai rnedmEeunrt os p(esaene White, 2010). Chapter 4 - Intensified Competition and the Impact on Credit Ratings
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