Analyst Promotions within Credit Rating Agencies: Accuracy or Bias? [report]

Darren Kisgen, Matthew Osborn, Jonathan Reuter
2016 unpublished
We study the determinants of analyst promotions within Moody's using data collected from corporate debt credit reports. We find that Moody's is more likely to promote analysts who are accurate, but less likely to promote analysts who are downgraders (relative to S&P). Combined, analysts who are accurate but not overly negative are approximately twice as likely to get promoted. Furthermore, analysts whose downgrades are associated with significant negative equity returns are less likely to be
more » ... ess likely to be promoted, and firms with pessimistic analysts are more likely to be assigned new analysts. Our findings are consistent with Moody's attempting to balance the conflicting preferences of investors and issuers. JEL classification: G14, G24, G28
doi:10.3386/w22477 fatcat:grv57pdeufarbidntt4bqoow3y