52ca6dc1___Carlson_School_of_Management__Presentation
[Date] 9/12/2014 [Presentation] 
Geoffrey Tate, Univeristy of North Carolina – Chapel Hill “ Do Credit Analysts Matter? The Effect of Analysts on Ratings, Prices, and Corporate Decisions Do Credit Analysts Matter? The Effect of Analysts on Ratings, Prices, and Corporate Decisions (492.23 KB) ” We find evidence of systematic optimism and pessimism among credit analysts, comparing contemporaneous ratings of the same firm across rating agencies. These biases carry through to debt prices and negatively predict future changes in credit spreads, consistent with mispricing. Moreover, they affect corporate policies: firms covered by more pessimistic analysts issue less debt, use more equity financing, and experience slower revenue growth. We find that MBAs provide higher quality ratings; however, optimism increases and accuracy decreases with tenure covering the firm. Our analysis uncovers a novel mechanism through which debt prices become distorted and demonstrates its effect on corporate decisions.
Finance Department Guest Seminar Archives 2010-Present | Carlson School of Management
Presentation