The Use of Credit Ratings in the Delegated Management of Fixed Income Assets

The authors are grateful for comments and suggestions made by Richard Cantor, Jason Donaldson, Javier Gil-Bazo, Clifton Green, John Hund, Jens Josephson, Christian Leuz, Frank Partnoy, José-Luis Peydró, Giorgia Piacentino, Veronika Pool, Oliver Spalt, and Victoria Vanasco. The authors also thank conference and seminar participants at the 2020 GSU-RFS FinTech Conference, 10th Anniversary of Financial Crisis Conference at Chicago Booth, the 6th HEC Paris Workshop on Banking, Finance, Macroeconomics, and the Real Economy, the 7th Luxembourg Asset Management Summit, the 2019 Conference on Regulating Financial Markets at Goethe University, Kogod School of Business, Mannheim University, Pompeu Fabra University, Swedish House of Finance at the Stockholm School of Economics, Tilburg University, Uppsala University, and VU Amsterdam for helpful comments. The authors thank Mustafa Bulut, Ajitha Duvvuri, Ensari Eroglu, Anton Nartov, Katarina Warg, and Mengyu Yang for research assistance. This paper was previously circulated as “The Private Use of Credit Ratings: Evidence from Mutual Fund Investment Mandates” and “The Use of Credit Ratings in Financial Markets.”