Credit Rating Agencies Respond Rationally to Risk From R&D Investment, Study Finds

Julia Ann Easley — October 04, 2018 - 9:01pm

New research busts the myth that credit rating agencies are lazy and biased when it comes to accounting for innovation.

Professor Paul Griffin of the Graduate School of Management at the University of California, Davis, and his co-authors recently examined U.S. credit rating data. With a shift in the U.S. toward a knowledge-based economy, creditworthiness increasingly depends on the success of a firm’s research and development investments and other intangible assets.

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Credit Rating Agencies Respond Rationally to Risk From R&D Investment, Study Finds