Economics and Accounting Honors Theses

Date of Creation

5-1-2017

Degree Type

Departmental Honors Thesis - Restricted Access

First Advisor

Professor Karen Teitel

Abstract

This paper analyzes the impact of the Dodd-Frank Wall Street Consumer Protection Act (Dodd-Frank) on the informativeness of corporate credit ratings changes as measured by stock returns. I find that the market reaction to credit rating upgrades increased and downgrades decreased significantly after Dodd-Frank. In addition, the association between credit rating changes and leading market returns increased for downgrades. The association did not change for upgrades. Together, these results suggest that the Dodd-Frank Wall Street Reform and Consumer Protection Act did not increase the information content or timeliness of credit ratings downgrades, but did increase the information content of upgrades without changing the timeliness.

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