Rating Agencies and Their Credit Ratings (eBook)

What They Are, How They Work, and Why They are Relevant

Herwig Langohr, Patricia Langohr (Autoren)

eBook Download: PDF

2010 | 1. Auflage
524 Seiten
Wiley (Verlag)
978-0-470-71435-5 (ISBN)

Infos

Credit rating agencies play a critical role in capital markets, guiding the asset allocation of institutional investors as private capital moves freely around the world in search of the best trade-off between risk and return. However, they have also been strongly criticised for failing to spot the Asian crisis in the early 1990s, the Enron, WorldCom and Parmalat collapses in the early 2000s and finally for their ratings of subprime-related structured finance instruments and their role in the current financial crisis. This book is a guide to ratings, the ratings industry and the mechanics and economics of obtaining a rating. It sheds light on the role that the agencies play in the international financial markets. It avoids the sensationalist approach often associated with studies of rating scandals and the financial crisis, and instead provides an objective and critical analysis of the business of ratings. The book will be of practical use to any individual who has to deal with ratings and the ratings industry in their day-to-day job. Reviews "e;Rating agencies fulfil an important role in the capital markets, but given their power, they are frequently the object of criticism. Some of it is justified but most of it portrays a lack of understanding of their business. In their book The Rating Agencies and their Credit Ratings, Herwig and Patricia Langohr provide an excellent economic background to the role of rating agencies and also a thorough understanding of their business and the problems they face. I recommend this book to all those who have an interest in this somewhat arcane but extremely important area."e; -Robin Monro-Davies, Former CEO, Fitch Ratings. "e;At a time of unprecedented public and political scrutiny of the effectiveness and indeed the basic business model of the Credit Rating industry, and heightened concerns regarding the transparency and accountability of the leading agencies, this book provides a commendably comprehensive overview, and should provide invaluable assistance in the ongoing debate."e; -Rupert Atkinson, Managing Director, Head of Credit Advisory Group, Morgan Stanley and member of the SIFMA Rating Agency Task Force "e;The Langohrs have provided useful information in a field where one frequently finds only opinions or misconceptions. They supply a firm base from which to understand changes now underway. A well-read copy of this monograph should be close to the desk of every investor, issuer and financial regulator, legislator or commentator."e; -John Grout, Policy and Technical Director, The Association of Corporate Treasurers

Autor

HERWIG LANGOHR was Professor of Finance and Banking at INSEAD, in Fontainebleau, France, which he joined in 1976, specialising in corporate finance, financial services and corporate governance. Professor Langohr served on several boards of directors, including the Board of Directors and the Audit Committee of the financial services group KBC Group N.V. He was also a regular advisor in corporate finance and strategy in the banking sector. He contributed to academic journals such as The Journal of Monetary Economics, The Journal of Financial Economics and The Journal of Money, Credit and Banking and a number of professional journals. He passed away on 28 May 2008 at the age of 64. PATRICIA LANGOHR is Professor of Economics at the ESSEC Business School, in Cergy, France, since 2005. Her research specializes in industrial organization, dynamic models of competition and the financial services industry. Prior to that, she was a researcher at the Bureau of Labor Statistics in Washington D.C. Professor Langohr obtained her PhD in Managerial Economics from Kellogg at Northwestern University. She has a Diploma in Economics from the Humboldt Universität in Berlin and a Maîtrise in Monetary Economics and Banking from the Université Paris IX Dauphine.

Inhalt

ForewordPreface1 Introduction1.1 Context and Premises1.2 Book Chapters1.3 Supporting MaterialsPART A: CREDIT RATING FOUNDATIONS2 Credit Ratings2.1 The World of Corporate Defaults2.2 Credit Rating Scales2.3 The Interpretation of Credit Ratings2.4 Credit Ratings: Summary and Conclusions3 The 'Raison d'Être' of Credit Ratings and Their Market3.1 Needs for Credit Ratings - or the Demand Side of Ratings3.2 Credit Ratings as a Solution to Information Asymmetry: Economic Analysis.3.3 Credit Rating Segments - or Scale and Scope of the Rated Universe.4 How to Obtain and Maintain a Credit Rating4.1 The Rating Preparation4.2 The Rating4.3 Quality of the Rating ProcessPART B: CREDIT RATING ANALYSIS5 The France Telecom Credit Rating Cycle5.1 From Sovereign Status to Near Speculative Grade5.2 Turning Point and Rating Recovery (Fall 2002-Winter 2004)5.3 Analysis and Evaluation6 Credit Rating Analysis6.1 Fundamental Corporate Credit Ratings6.2 Corporate Ratings Implied by Market Data6.3 Special Sector Ratings6.4 Technical Appendix7 Credit Rating Performance7.1 Relevance: Ratings and Value.7.2 Preventing Surprise in Defaults: Rating Accuracy and Stability7.3 Efficiency Enhancement: Stabilization in Times of CrisisPART C: THE CREDIT RATING BUSINESS8 The Credit Rating Industry8.1 The Rise of the Credit Rating Agencies8.2 Industry Specifics and How they Affect Competition8.3 Industry Performance9 Regulatory Oversight of the Credit Rating Industry9.1 The Regulatory Uses of Ratings9.2 The Regulation of the Industry9.3 Analysis and Evaluation10 Summary and Conclusions10.1 The Rating Agencies Value Added10.2 The Challenges Rating Agencies Face Today10.3 Concluding ThoughtsReferencesIndex

Rezensionen

"At a time of unprecedented public and political scrutiny of the
effectiveness and indeed the basic business model of the Credit
Rating industry, and heightened concerns regarding the transparency
and accountability of the leading agencies, this book provides a
commendably comprehensive overview, and should provide invaluable
assistance in the ongoing debate."

-Rupert Atkinson, Managing Director, Head of Credit
Advisory Group, and member of the SIFMA Rating Agency Task Force

"The Langhors have provided useful information in a field where
one frequently finds only opinions or misconceptions. They supply a
firm base from which to understand changes now underway. A
well-read copy of this monograph should be close to the desk of
every investor, issuer and financial regulator, legislator or
commentator."

-John Grout, Policy and Technical Director, The
Association of Corporate Treasurers

Produkt-Details

• Erscheint lt. Verlag: 1.4.2010
• Reihe/Serie: Wiley Finance Series
• Reihe/Serie: Wiley Finance Series
• Sprache: englisch
• Themenwelt: Recht / Steuern ► Wirtschaftsrecht
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management ► Finanzierung
• Themenwelt: Betriebswirtschaft / Management ► Spezielle Betriebswirtschaftslehre ► Bankbetriebslehre
• Schlagworte: Finance & Investments • Finanz- u. Anlagewesen • Institutional & Corporate Finance • Institutionelle Finanzplanung
• ISBN-10: 0-470-71435-2 / 0470714352
• ISBN-13: 978-0-470-71435-5 / 9780470714355