Credit Rating Agencies' Function on Bond Markets: Price Stability vs. Information Transmission

The relation that may exist between rating announcements and bond spreads is unclear, despite the fact that many event studies have been dedicated to that problem. Several of them cast a doubt upon the utility and the function of credit rating agencies on the bond markets, which are usually supposed to transmit information about issuer default risks. This paper aims to re-examine the function of credit rating agencies on the bond markets. The...