Journal of Financial Services Research

, Volume 43, Issue 3, pp 293–319

Unsolicited Versus Solicited: Credit Ratings and Bond Yields

  • Seung Hun Han
  • William T. Moore
  • Yoon S. Shin
  • Seongbaek Yi

DOI: 10.1007/s10693-012-0137-z

Cite this article as:
Han, S.H., Moore, W.T., Shin, Y.S. et al. J Financ Serv Res (2013) 43: 293. doi:10.1007/s10693-012-0137-z


This paper is the first attempt to analyze Standard & Poor’s unsolicited and solicited ratings by using bond-yield data in Japan. Our findings show that there are differences in firm characteristics between firms seeking solicited ratings and those that receive unsolicited ratings. Firms with solicited ratings have less information asymmetry and are more likely to be owned by foreign investors, generate more revenue from exports, be cross-listed in the US, and have higher firm quality. But, firms with unsolicited ratings pay higher costs for debt, and their bond prices react more strongly to credit-rating changes. Yield spreads for new bonds with unsolicited ratings are higher than those with solicited ratings, because unsolicited ratings have higher information asymmetry, and investors therefore demand higher yields. We find that bond-price reactions to the announcements of unsolicited rating downgrades (upgrades) are negative (positive) and significant, while bond prices do not react significantly to solicited rating downgrades or upgrades.


Credit ratingsUnsolicited ratingsYield Spreads

JEL Classification


Copyright information

© Springer Science+Business Media, LLC 2012

Authors and Affiliations

  • Seung Hun Han
    • 1
  • William T. Moore
    • 2
  • Yoon S. Shin
    • 3
  • Seongbaek Yi
    • 4
  1. 1.KAISTDaejeonSouth Korea
  2. 2.Georgia Southern UniversityStatesboroUSA
  3. 3.Loyola University MarylandBaltimoreUSA
  4. 4.Pukyong National UniversityBusanSouth Korea