Tightening Credit Standards : The Role of Accounting Quality

  title={Tightening Credit Standards : The Role of Accounting Quality},
  author={Philippe Jorion and Charles Shi and Paul Merage},
  • Philippe Jorion, Charles Shi, Paul Merage
  • Published 2007
Over the latest twenty years, the average credit rating of U.S. corporations has trended down. This observation has been interpreted as evidence that rating agencies have been tightening credit standards. More formally, Blume, Lim, and MacKinlay (1998) model the credit rating process by an ordered probit regression and indeed find that the annual intercept, reflecting the average credit rating, has been drifting down, holding the effect of other variables constant. We reexamine the causes of… CONTINUE READING


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