Enhancing the accountability of credit rating agencies: the case for a disclosure-based approach.(Canada)

McGill Law Journal, December, 2006 by Rousseau, Stephane

Credit rating agencies ("CRAs") play a vital role in enabling financial markets to operate efficiently by acting as informational intermediaries specializing in the appraisal of the creditworthiness of corporations that issue debt. Despite their importance, however, rating agencies remain unregulated private institutions. The recent wave of corporate scandals has led many to call their contribution to market efficiency into question. In light of such criticism, studies conducted by lawmakers and regulators sought to further examine the role and effectiveness of CRAs. Although the studies revealed no particular wrongdoing, they warned of potential problems that could disrupt the smooth operation of capital markets. These problems relate to the reliability and integrity...

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