AN EMPIRICAL STUDY OF ANALYSTS’ INFLUENCE OVER RATINGS

Abstract

This study examines if credit analysts have an influence over ratings. The results of this study indicate that analysts do have an influence over ratings. Specifically, such analyst effects are more pronounced for rating issues pertaining to firms in less transparent business environments. In addition, given that analyst effects do exist, further tests show that years of experience of analysts contribute positively to ratings issued. Lastly, I find no evidence that ratings made by analysts who were more optimistic tend to experience immediate rating downgrades in the following year.