30 cr er eg da ri tdrl ea st isn og fs . t Ihne f pa cr to, dt uh cet mt yapj oer, iftoycoufs sst ou md i ee ws ph ea rt ,f oi fr mn oetd porni ms tarrui lcyt, uorne dt hper ordo ul ec tosf, the CRAs13.This is likely due to the widespread belief that CRAs assign favorable ratings, especially to structured finance securities. The issuer-paid business model in place for the entire CRA industry gives CRAs an incentive to cater rHaet ientgas l .t, o2 0i s1s6u;eZr sh’odueemt aanl . ,d2(0s1e7e ), . eC. gR. ,AFs l ay rnen a&c c uGsheedn to, f 2h0a1v8i n; gGcroi fnf itnr i be tu tael d. , 2t o0 t1h3e; ds terputcht uarnedd lf ei nnagnt hc eosfe tchuer igt il eo sb (asl ef ei n, ea .ngc. , i Fa ll ycnr ni s &i s Gbhy eansts, i2g0n1i n8g; Hf aev eotr aa bl . l2e 0r1a6t i; nZghsotuo, ei nt vaels. ,t o2r0s1r7e)l i, eedi tthoeor hdeuaev i ltyo opno corre dr ai tt irnagt i ns tgasnidnaervdasl ui na t ti nh ge iar sas ne tasl.y s i s o r b e c a u s e In addition, CRAs are found to more likely issue less-accurate ratings during bMoäohml mpaenrni o, d2s0 1( s6e; eHee. g e. , tBaalr. ,- I2s 0a 1a c2 )&. BS ah ra-pI si raoa, c2a0n1d3 ; SBhoa lpt oi rno e(t2 a0l1. , 32)0, 1f o2r; De xi lal ymapnl ed, gc oi vme ma enr cuima l bme ro toi vf ees xopfl aCnRaAtsi otnosmf oa xr i mt hiizse br ue tsui nr ensssa nc ydctl he eedf fee-cetm: rpehpausti sa toi onnc rrei ds ki t, mbooonmit)o.ring by CRAs in periods of low default probability (i.e., in an economic Another factor that is found to influence rating quality is the size of the issuer. He et al. (2012) examine the role of the CRAs in the rating of private-label residential mortgage-backed securities. They find that larger issuers experience he ai grhl ieerr fsut unddyi nogncCo Rs tAs st ha na nd smmoar ltlgeargies-sbuaecrkse. dT hs eeci ru rrietsi eusl ttshaart es uc og gnes si st tseinnta wc ciut hr aac ny of ratings related to issuer size (He et al., 2011). 13p r oTdhuecr tes .aFr oe r set ux admi e ps l et h, aDte kf ouc ue st aoln. ( 2o t0h1e9r) ,f aucstionrgs abseasmi dpe lse corfe 4d ,i2t 0r1a tEi nugr otpheaat nd oe trei gr imn ai nt ee dt hMeBpS rti rcai nngc hoefs ssthr uo wc t utrheadt tfihneaqnuciaallitcyriosfisth. e trustee has an impact on the pricing of structured finance securities during the most recent global
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