Rating the ratings

the acceptability of international rating methodologies

Nigel Finch

Research output: Chapter in Book/Report/Conference proceedingConference proceeding contribution

Abstract

We explore the practices of international rating agencies and develop a framework based on the auditor independence model to understand the various rating agency methodologies. Rating agencies methodologies are classified as solicited. unsolicited or cooperative depending upon: (1) whether the rating has been requested; (2) whether the rating agency receives a payment; and (3) what information source the agency uses to form its opinion. These different methodologies will affect the level of independence the agency has informing an unbiased and objective opinion, and ultimately this will affect the acceptability of the rating. The unsolicited and co-operative rating methods allow for independence to be maintained because independence is largely driven by agency remuneration. Ultimately, the most acceptable rating methodology is the co-operative rating method because of the greater reliability of the information source that is used informing the rating opinion.
Original languageEnglish
Title of host publicationProceedings of the Allied Academies International Internet Conference
EditorsJo Ann Carland, Jim Carland
Place of PublicationCullowhee, NC
PublisherAllied Academies
Pages12-16
Number of pages5
Volume7
Publication statusPublished - 2005
EventAllied Academies International Internet Conference (8th : 2005) - Las Vegas, NV
Duration: 18 Jul 200531 Jul 2005

Conference

ConferenceAllied Academies International Internet Conference (8th : 2005)
CityLas Vegas, NV
Period18/07/0531/07/05

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