Suchergebnisse

The Dodd Frank Act of 2010 (DFA) was the legislative response by the US Government to the Global Financial Crisis of 2007. DFA's rescission of Rule 436 (g) of the Securities Act of 1933 - the exemption from liability clause - was the response to the post-crisis perception that credit rating agencies were insufficiently constrained by reputational risk considerations and consistently failed to provide high quality and accurate credit ratings as a consequence of the immunity they enjoyed and the regulatory reliance placed on ratings, as well as the conflicts of interest that they faced. This paper investigates whether the market failure event that occurred in the Asset Backed Securities market immediately after DFA was signed into law on July 21, 2010 was due to real economic concerns held by rating agencies about operating under a liability regime or whether it was merely an act of brinkmanship on the part of the rating agencies. The paper also predominantly examines US case law to identify the dilution of the freedom of speech defence in state courts, the conflict of interest issues and the legal challenges faced by plaintiffs when bringing a lawsuit against credit rating agencies, and proposes a novel co-pay and capped liability model to address the concerns of both credit rating agencies and investors.

This study critically investigates the determinants of sovereign credit ratings in emerging markets, during 2001 to 2015. This was conducted in 20 emerging markets, using S&P and Moody ratings. Linear framework econometric approach with the use of pooled Ordinary Least Square regression method was adopted in the study. The explanatory power of the estimated models has a good performance across both rating agencies. The study reveals the importance of five macroeconomic variables in determining the sovereign credit rating of emerging markets. These variables are: gross domestic product per capital, inflation, government debt, reserves, and external debt. Also, world governance indicators, a proxy for qualitative/political variables, were found to be an essential determinant of rating.

The paper concerns the impact of announcements published by rating agencies on the government bond yield in selected countries of the world. Ratings assigned to debt securities on account of the issuer's financial standing are an important determinant of their yield. Factors that affect the rate of return of a given traded debt, in addition to idiosyncratic factors, i.e. those related to the issuer's economy, and global factors, also include the ratings of connected countries. Moreover, empirical studies carried out in this area prove that the relationship is asymmetrical. This allows us to suppose that favourable information concerning the improvement of government bond ratings is not reflected in the decrease in their yield. The aim of the paper is the analysis of interactions between the yields of 10‑year government bonds issued by selected economies. A subject that is of particular interest is the evaluation of the impact of positive and negative changes in credit rating assessments made by international agencies on the yield of bonds issued by other economies than the country concerned in the assessment. The spatial scope of the analysis concerns 10‑year government bonds issued by 40 countries in the period of 2008-2017. In the study, dynamic spatial models for pooled time series and cross‑sectional data and dynamic spatial panel data models were used.

In this study, we investigate the relationship between credit ratings and audit opinions of financially distressed companies impending bankruptcy. Using Korean publicly-held firms for the years 2007 through 2014, we analyze 97 bankrupt companies with credit rating available before they file bankruptcy. Following prior research (Geiger et al., 2005), we find that the propensity to issue a going concern audit opinion is associated with the credit score issued by NICE immediately prior to the audit opinion date. We also compare credit ratings to audit opinions to investigate which of the two is more conservative and provides the earlier signal of bankruptcy. Through empirical test, we can conclude that audit system has more successfully predictive function in signaling preceding bankruptcy than CRAs' system with overly optimism. We argue that after a string of high-profile corporate failures such as Enron and Arthur Anderson's bankruptcies, legislators portrayed auditors negatively and ultimately led to the enactment and more forced liabilities and thus auditors become more conservative. To remedy CRAs' failure by providing overly optimism, we suggest that like as auditors, CRAs' regulations should be more strengthened on their liability about issuing credit ratings.

The regulation of credit rating agencies and their activities has been evolving significantly in recent years as the response to difficulties experienced during the economic crises. According to number of post-crises analysis, it is claimed that rating agencies played a role and are guilty for much of the crisis events. Until then the regulators somehow neglected to regulate these financial market entities, despite the important role they perform in the whole financial system. The paper addresses the background and process of assigning sovereign ratings, role of sovereign ratings on the financial marketand current regulation on providing sovereign rating in the European Union. The aim is to confirm or disprove the benefits of restrictions put on sovereign debt ratings by the European rules using mostly the descriptive and empirical method. "This is a targeted publication on the one topic (Financial Law). It has been requested for inclusion in WOS."