The impact of short-selling threats on credit rating performance and usage: Evidence from a natural experiment

IF 2.2 3区管理学 Q2 BUSINESS, FINANCE

Journal of Business Finance & Accounting Pub Date : 2024-05-14 DOI:10.1111/jbfa.12807

Mei Cheng, Eliza X. Zhang

引用次数: 0

Abstract

Using Regulation SHO as a controlled experiment, we examine the impact of short-selling threats on credit rating performance and credit rating usage in debt contracts. We find that when short-selling constraints are removed for pilot firms, rating accuracy increases, but rating stability decreases for these firms relative to non-pilot firms. This result suggests that short-selling threats push rating agencies to enhance rating accuracy at the cost of rating stability. We also find less rating usage in debt contracts for pilot firms than for non-pilot firms when short-selling constraints are removed for pilot firms, suggesting that in the presence of short-selling threats, debt contracting parties emphasize rating stability over rating accuracy. Overall, our study informs academics, practitioners and regulators about short sellers’ disciplining effect on rating agencies and provides novel evidence on the rating property trade-off and its implication for rating usage.

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卖空威胁对信用评级表现和使用的影响：来自自然实验的证据

我们利用《SHO 条例》作为对照实验，研究了卖空威胁对债务合约中信用评级表现和信用评级使用的影响。我们发现，与非试点公司相比，当试点公司的卖空限制被取消时，这些公司的评级准确性会提高，但评级稳定性会降低。这一结果表明，卖空威胁促使评级机构以牺牲评级稳定性为代价来提高评级准确性。我们还发现，当试点企业的卖空限制被取消时，试点企业在债务合同中的评级使用率低于非试点企业，这表明在存在卖空威胁的情况下，债务合同双方会强调评级稳定性而非评级准确性。总之，我们的研究为学术界、从业人员和监管机构提供了有关卖空者对评级机构的约束作用的信息，并为评级属性权衡及其对评级使用的影响提供了新的证据。

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.