Search

Using an international sample of more than 65,000 rating actions by Fitch, Moody's and S&P, we analyze the effect of the Dodd-Frank Act on credit ratings. We document that (i) rating report content changes significantly after Dodd-Frank and (ii) show, by exploiting within firm-quarter variation, that ratings significantly improve after DoddFrank. While ratings are more accurate, updated more frequently, and reflect firm fundamentals more closely, there is no evidence for a decrease in rating stability after Dodd-Frank. Firms, especially constrained firms, benefit and issue more debt after rating agencies' first post Dodd-Frank rating action. For European firms, effects are generally weaker than for U.S. firms

We investigate whether credit rating agencies systematically follow each other's rating decisions. Therefore we rely on the rotation of rating analysts within credit rating agencies and their impact on the rating. Using this institutional setup we can disentangle causal herding behavior from simple co-movement between credit rating agencies due to changes in firm fundamentals. Rating analysts have substantial influence on ratings and we use their individual optimism/pessimism as instrumental variable to estimate causal effects of a rating change induced by an analyst on rating changes by other credit rating agencies. For our comprehensive sample of U.S. and European firms, rated by S&P, Moody's and Fitch between 1995 - 2016, we find significant herding behavior among credit rating agencies. This average herding behavior amounts to 0.4 notches for a one notch change at another credit rating agency, which is roughly half the size of the simple co-movement between credit rating agencies.

During the 1960s and 1970s a large number of immigrants came to Germany as temporary labour migrants. Many of them remained, captured their family and their children entered the labour market since the eighties. Our paper analyses their labour market experience in terms of employment, unemployment and earnings. The recruitment stop induced by the first oil crisis in 1973 allows us to distinguish guest workers, on the one hand, and family members, on the other hand, in a natural experiment setting. The results reveal enormous differences between the groups. Guest workers who came until 1973 differ markedly from those migrants who came later as family members, especially in terms of unemployment. These differences are more pronounced for women than for men. The descendants of the European guest workers are very well integrated into the German labour market which points towards positive long-run effects of the guest worker policy measure. However, the migrants stemming from a different ethnic background face much more difficulties in terms of labour market integration.