Artikel
Advertisement-financed credit ratings
This paper investigates the incentives of a credit rating agency (CRA) to generate accurate ratings under an advertisement-based business model. To this end, we study a two-period endogenous reputation model in which a CRA can increase the precision of its ratings by exerting effort. The CRA receives a revenue not from rating fees, as is standard in the literature, but through online advertising. We show that the advertisement-based business model provides sufficient incentives for the CRA to improve the precision of signals at intermediate levels of reputation. Furthermore, we identify conditions under which truthful reporting is incentive compatible.
- Language
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Englisch
- Bibliographic citation
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Journal: Journal of Economics and Finance ; ISSN: 1938-9744 ; Volume: 46 ; Year: 2021 ; Issue: 1 ; Pages: 188-206 ; New York, NY: Springer US
- Classification
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Wirtschaft
Asymmetric and Private Information; Mechanism Design
Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies
Information and Product Quality; Standardization and Compatibility
- Subject
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Credit rating agencies
Rating precision
Information acquisition
Advertisement
Reputation
- Event
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Geistige Schöpfung
- (who)
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Hoppe-Wewetzer, Heidrun
Siemering, Christian
- Event
-
Veröffentlichung
- (who)
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Springer US
- (where)
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New York, NY
- (when)
-
2021
- DOI
-
doi:10.1007/s12197-021-09562-8
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Artikel
Associated
- Hoppe-Wewetzer, Heidrun
- Siemering, Christian
- Springer US
Time of origin
- 2021
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