Rating Agency Fees: Pay to Play or Pay for Work?

摘要: We document a significant relationship between ratings fees and credit rating levels in the municipal bond market. In contrast to prior evidence from corporate structured finance markets indicating “pay play” phenomenon, our results suggest that market are primarily pay for work. conclude agency incentives differ across asset classes fee disclosure mitigates conflicts of interest inherent an issuer-pays compensation structure. Our also substitution effect certification agents muni The strong positive is exclusive subset now uninsured issuers who previously purchased AAA MBIA AMBAC. Without benefit pricing provided by insurers, these have increased incentive agencies certification.