Comment on B. du Marais et al.: Rating the Law - How Financial Agencies are Assessing the Legal Risks of Financial Transactions

LAW AND ECONOMICS OF RISK IN FINANCE, Peter Nobel and Marina Gets, eds., pp. 35-40, Schulthess, Zürich, 2007

U. of St. Gallen Law & Economics Working Paper No. 2008-13

7 Pages Posted: 27 May 2008 Last revised: 8 Aug 2008

Date Written: June 2007

Abstract

Professor du Marais and his colleagues analyze the way CRAs condition their ratings on the effectiveness of debt collection. Three such agencies are studied: Standard and Poor, Moody's and Fitch. The method used was to conduct interviews of stakeholders, the CRAs, top managers of all kinds of issuers, and staff of the regulators. All of these interviews were conducted in France.

This paper is in the line of papers that make serious studies of private institutions that affect the law and markets. These institutions have not received sufficient scrutiny, so this paper is welcome. In my view, the paper's positive findings are valuable but its normative critique needs more work. Thus, this Comment should be taken as a request for further research. My remarks are in three categories: market responses; ratings criteria; and data issues.

Keywords: Comment

JEL Classification: G10, G28, K22

Suggested Citation

Schwartz, Alan, Comment on B. du Marais et al.: Rating the Law - How Financial Agencies are Assessing the Legal Risks of Financial Transactions (June 2007). LAW AND ECONOMICS OF RISK IN FINANCE, Peter Nobel and Marina Gets, eds., pp. 35-40, Schulthess, Zürich, 2007, U. of St. Gallen Law & Economics Working Paper No. 2008-13, Available at SSRN: https://ssrn.com/abstract=1137923 or http://dx.doi.org/10.2139/ssrn.1137923

Alan Schwartz (Contact Author)

Yale Law School ( email )

P.O. Box 208215
New Haven, CT 06520-8215
United States
203-432-4030 (Phone)
203-432-8260 (Fax)

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