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Three Essays On Opacity, Corporate Governance, And Credit Ratings, Yiwen Gu
Three Essays On Opacity, Corporate Governance, And Credit Ratings, Yiwen Gu
Graduate Theses and Dissertations
In the first essay, utilizing a more recent and expanded 20-year sample 1991-2010 of dual-rated bonds issued, I confirm Morgan's (2002) finding that banks are relatively more opaque than nonbanks. The likelihood of a rating split is higher, and the magnitude of the rating gap is larger, for banks than nonnbanks. Moreover, rating agency disagreements are more significant for banks with relatively higher loan and trading securities holdings and maintain lower capital, and for banks engaged in mortgage securitization. Importantly, I find that rating agency disagreements reflect market proxies of information uncertainty. Further, opacity makes external financing more costly. Equity …
The Opaqueness Of Fair Value Assets And Systematic Risk In The Banking Industry, Jody Wayne Bland
The Opaqueness Of Fair Value Assets And Systematic Risk In The Banking Industry, Jody Wayne Bland
Inquiry: The University of Arkansas Undergraduate Research Journal
Opacity has economy-wide implications. A lack of information, whether from non-disclosure or complexity of business, creates uncertainty that even the most sophisticated of investors must face. In this paper, I analyze the relationship between opacity and the systematic risk of bank holding companies. Specifically, I find that investments in opaque assets required to be reported at fair value significantly affect the levels of financial institutions’ systematic risk. Furthermore, I provide evidence that firm investments in opaque assets contribute to systematic risk to an even greater degree during times of financial crisis.