The Rating Agencies and Their Credit Ratings: What They Are, How They Work, and Why They are Relevant (The Wiley Finance Series) [Hardcover]

Herwig Langohr (Author), Patricia Langohr (Author)

Book Description

ISBN-10: 0470018003 | ISBN-13: 978-0470018002 | Publication Date: March 17, 2009 | Edition: 1

Credit rating agencies play a critical role in capital markets, guiding the asset allocation of institutional investors as private capital moves freely around the world in search of the best trade-off between risk and return. However, they have also been strongly criticised for failing to spot the Asian crisis in the early 1990s, the Enron, WorldCom and Parmalat collapses in the early 2000s and finally for their ratings of subprime-related structured finance instruments and their role in the current financial crisis.

This book is a guide to ratings, the ratings industry and the mechanics and economics of obtaining a rating. It sheds light on the role that the agencies play in the international financial markets. It avoids the sensationalist approach often associated with studies of rating scandals and the financial crisis, and instead provides an objective and critical analysis of the business of ratings. The book will be of practical use to any individual who has to deal with ratings and the ratings industry in their day-to-day job.

Reviews

"Rating agencies fulfil an important role in the capital markets, but given their power, they are frequently the object of criticism.  Some of it is justified but most of it portrays a lack of understanding of their business.  In their book The Rating Agencies and their Credit Ratings, Herwig and Patricia Langohr provide an excellent economic background to the role of rating agencies and also a thorough understanding of their business and the problems they face.  I recommend this book to all those who have an interest in this somewhat arcane but extremely important area."
-Robin Monro-Davies, Former CEO, Fitch Ratings.

"At a time of unprecedented public and political scrutiny of the effectiveness and indeed the basic business model of the Credit Rating industry, and heightened concerns regarding the transparency and accountability of the leading agencies, this book provides a commendably comprehensive overview, and should provide invaluable assistance in the ongoing debate."
-Rupert Atkinson, Managing Director, Head of Credit Advisory Group, Morgan Stanley and member of the SIFMA Rating Agency Task Force

"The Langohrs have provided useful information in a field where one frequently finds only opinions or misconceptions. They supply a firm base from which to understand changes now underway. A well-read copy of this monograph should be close to the desk of every investor, issuer and financial regulator, legislator or commentator."
-John Grout, Policy and Technical Director, The Association of Corporate Treasurers

 

Editorial Reviews

Review

"At a time of unprecedented public and political scrutiny of the effectiveness and indeed the basic business model of the Credit Rating industry, and heightened concerns regarding the transparency and accountability of the leading agencies, this book provides a commendably comprehensive overview, and should provide invaluable assistance in the ongoing debate."
–Rupert Atkinson, Managing Director, Head of Credit Advisory Group, and member of the SIFMA Rating Agency Task Force

"The Langhors have provided useful information in a field where one frequently finds only opinions or misconceptions. They supply a firm base from which to understand changes now underway. A well-read copy of this monograph should be close to the desk of every investor, issuer and financial regulator, legislator or commentator."
–John Grout, Policy and Technical Director, The Association of Corporate Treasurers

From the Inside Flap

Herwig Langohr was Professor of Finance and Banking at Insead, in Fontainebleau, France, which he joined in 1976, specialising in corporate finance, financial services and corporate governance. He visited numerous academic institutions such as The Wharton School, The Darden School and the Universität Konstanz (Germany). He was holder of the Goldschmidt Chair in Corporate Governance at the Solvay Business School (Brussels). Professor Langohr served on several boards of directors, in particular on the Board of Directors and the Audit Committee of both the financial services group KBC Group N.V. and KBC Insurance N.V. He was Dean MBA and member of the Executive Committee at INSEAD from 1993-1995. He was also a frequent director of Executive Programs and a regular advisor in corporate finance and strategy in the banking sector. He was a contributor to academic journals such as The Journal of Monetary Economics, The Journal of Financial Economics and The Journal of Money, Credit and Banking; to numerous professional journals and newspapers and a regular publisher of case studies. He passed away at the age of 64 on May 28^th 2008.

Patricia Langohr is Professor of Economics at the Essec Business School, in Cergy, France, since 2005. Her research specializes in industrial organization, dynamic models of competition and the financial services industry. She teaches microeconomics, industrial organization and business economics. Prior to that, she was a researcher at the Price and Index Number Research division of the Bureau of Labor Statistics in Washington D.C. Professor Langohr obtained her PhD in Managerial Economics and Strategy from the Kellogg School of Management at Northwestern University in December 2003. She has a Diploma in Economics from the Humboldt Universität in Berlin and a Maîtrise in Monetary Economics and Banking from the Université Paris IX Dauphine.

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Product Details

• Hardcover: 524 pages
• Publisher: Wiley; 1 edition (March 17, 2009)
• Language: English
• ISBN-10: 0470018003
• ISBN-13: 978-0470018002
• Product Dimensions: 7 x 1.4 x 9.8 inches
• Shipping Weight: 2.3 pounds (View shipping rates and policies)
• Average Customer Review: 5.0 out of 5 stars  See all reviews (2 customer reviews)
• Amazon Best Sellers Rank: #905,719 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

1 of 2 people found the following review helpful:

5.0 out of 5 stars Clear and concise (in a 400-500 page book sort of way), November 23, 2010

By 

Emily E. Ekins - See all my reviews
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This review is from: The Rating Agencies and Their Credit Ratings: What They Are, How They Work, and Why They are Relevant (The Wiley Finance Series) (Hardcover)

This book is excellent. If you want to understand the credit rating agency--the agencies' histories, their business models, how debt instruments are rated, as well as understand the regulatory side of things, this is the the book for you. Any paper or analysis on regulation, the financial industry, would likely benefit from this book.

1 of 2 people found the following review helpful:

5.0 out of 5 stars Valuable book for bond investor - helps understand credit ratings, November 9, 2009

By 

Fred Brown - See all my reviews

Amazon Verified Purchase

This review is from: The Rating Agencies and Their Credit Ratings: What They Are, How They Work, and Why They are Relevant (The Wiley Finance Series) (Hardcover)

Gave me a much better understanding of what credit ratings mean. Fast forwarded over sections of the book that I was not interested in but these were relatively small exceptions.