While the list of prospective issuers with credit ratings is lengthy, literature is sparse on how ratings from multiple credit rating agencies (CRAs) affect the performance of a company’s initial public offering (IPO). Our research is motivated by the lack of such literature and by Sangiorgi and Spatt (2017), who argue that multiple ratings are socially optimal if the benefit of the additional rating outweighs the cost of information production. This argument aligns with the “shopping hypothesis” and “information production hypothesis” of Bongaerts et al. (2012). Under the former hypothesis, issuers “shop” for an additional rating in hopes of improving … Read more
Philosophy of the Book Existing textbooks on corporate governance tend to have a strong focus on UK and/or US corporate governance. This focus is somewhat surprising as the UK and US corporate governance systems have features which clearly set them apart from pretty much the rest of the world. Indeed, the typical British and American stock-market listed firm is widely held (held by many shareholders) and control therefore lies with the management rather than the shareholders. In contrast, most stock-exchange listed firms from the rest of the world have a large shareholder whose control is substantial enough to have a significant influence over the firm’s affairs. Given these marked differences in ownership and control, corporate governance issues emerging in non-UK and non-US firms tend to be very different from those that may affect British and American companies. Hence, it is important for a textbook to bear in mind the diversity of ownership and control a
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