Financial reporting quality and uncertainty about credit risk among the ratings agencies

I study whether financial reporting quality resolves uncertainty about credit risk by examining how it affects disagreement between rating agencies. I find better reporting quality is associated with less uncertainty about credit risk as captured by disagreement about ratings between the agencies. Further, my results are consistent with reporting quality becoming more important in reducing uncertainty when an agency does not have access to private information. Finally, I examine whether SFAS 142, which ended goodwill amortization and requires managerial estimates to determine potential impairments of goodwill, affected uncertainty about credit risk. I find increased uncertainty between agencies about the goodwill account for firms with significant goodwill after the implementation of SFAS 142. I contribute to the literature on the role of reporting quality in debt markets and on debt market information intermediaries.

Department dc:contributor.department

Sloan School of Management.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2012

Author dc:creator

• Akins, Brian Keith

Advisor dc:contributor.advisor

• Joseph Weber.

• Sloan School of Management.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/77816

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/77816