An empirical analysis of the effects of the Dodd–Frank Act on determinants of credit ratings

IF 2.2 3区管理学 Q2 BUSINESS, FINANCE

Journal of Business Finance & Accounting Pub Date : 2023-03-19 DOI:10.1111/jbfa.12695

Anwer S. Ahmed, Dechun Wang, Nina Xu

引用次数: 0

Abstract

We study the effects of the Dodd–Frank Act (“Dodd–Frank”) on determinants of credit ratings. We predict that the increase in regulatory oversight and litigation risk prompted by Dodd–Frank, as well as requirements for improved disclosures and governance, motivated credit rating agencies (CRAs) to increase the reliance on verifiable quantitative fundamental information in determining ratings. We find that the power of firm fundamentals in explaining credit ratings increases significantly after Dodd–Frank. Furthermore, we find that the greater reliance on quantitative firm fundamentals at least partially drives the improvement in credit ratings’ ability to predict future defaults. Collectively, our evidence suggests that Dodd–Frank incentivizes CRAs to use more quantitative information in making rating decisions, which improves credit rating quality.

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多德-弗兰克法案》对信用评级决定因素影响的实证分析

我们研究了《多德-弗兰克法案》（"多德-弗兰克法案"）对信用评级决定因素的影响。我们预测，《多德-弗兰克法案》引发的监管监督和诉讼风险的增加，以及对改进信息披露和治理的要求，促使信用评级机构（CRAs）在确定评级时更多地依赖可验证的量化基本面信息。我们发现，在《多德-弗兰克法案》出台后，公司基本面对信用评级的解释力显著增强。此外，我们还发现，对公司量化基本面的更大依赖至少部分推动了信用评级预测未来违约能力的提高。总之，我们的证据表明，多德-弗兰克法案激励信用评级机构在做出评级决定时使用更多量化信息，从而提高了信用评级质量。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Journal of Business Finance & Accounting BUSINESS, FINANCE-

CiteScore

4.40

自引率

17.20%

发文量

期刊介绍： Journal of Business Finance and Accounting exists to publish high quality research papers in accounting, corporate finance, corporate governance and their interfaces. The interfaces are relevant in many areas such as financial reporting and communication, valuation, financial performance measurement and managerial reward and control structures. A feature of JBFA is that it recognises that informational problems are pervasive in financial markets and business organisations, and that accounting plays an important role in resolving such problems. JBFA welcomes both theoretical and empirical contributions. Nonetheless, theoretical papers should yield novel testable implications, and empirical papers should be theoretically well-motivated. The Editors view accounting and finance as being closely related to economics and, as a consequence, papers submitted will often have theoretical motivations that are grounded in economics. JBFA, however, also seeks papers that complement economics-based theorising with theoretical developments originating in other social science disciplines or traditions. While many papers in JBFA use econometric or related empirical methods, the Editors also welcome contributions that use other empirical research methods. Although the scope of JBFA is broad, it is not a suitable outlet for highly abstract mathematical papers, or empirical papers with inadequate theoretical motivation. Also, papers that study asset pricing, or the operations of financial markets, should have direct implications for one or more of preparers, regulators, users of financial statements, and corporate financial decision makers, or at least should have implications for the development of future research relevant to such users.