| Popis: |
Using a unique hand collected sample of professional connections between finance ministers and the directors and top executives of the three largest credit rating agencies for 38 European sovereigns between January 2000 and November 2017, we show that professional connections result in higher sovereign ratings. We find that the subjective component of ratings, captured by the current professional connection, has a more important role for developing than developed countries, whereby the average effect in developing European countries is estimated to be about 1.18, 0.38, and 0.80 notch by S&P, Moody’s and Fitch respectively. We also reveal that solicited sovereign ratings are significantly higher than unsolicited ratings. |
