Open AccessDoes American Stock Market React Differently to Expected Versus Surprise Ratings During Crisis Period? The Case of the 2008 Worldwide Financial Crisis
Author(s) -
Abdelkader Boudriga,
Dorsaf Azouz Ghachem
Publication year - 2018
Publication title -
international journal of accounting and financial reporting
Language(s) - English
Resource type - Journals
ISSN - 2162-3082
DOI - 10.5296/ijafr.v8i3.13587
Subject(s) - surprise , financial crisis , distrust , credibility , stock market , credit rating , event study , monetary economics , business , economics , order (exchange) , financial economics , actuarial science , finance , psychology , political science , social psychology , macroeconomics , paleontology , context (archaeology) , horse , biology , law , psychotherapist
We study the rating impact on American stock market during crisis period by distinguishing expected versus surprise announcements. If unexpected ratings generate stronger reaction than expected ones, which means that rating agencies maintain credibility and influence on investors’ decisions. Otherwise, they have to revise their methodologies and procedures in order to recover place on financial markets. Results show that during crisis period market reaction to bad and neutral expected rating announcements is negative and more accentuated than reaction to surprise announcements; on contrary to good news that produce a short positive impact when they are unexpected and are not perceived by the market otherwise. Results reflect once more market distrust to rating agencies and faith loss towards announcements.