...Allen H. Huang; Pepa Kraft; Shiheng Wang ABSTRACT This study examines whether and when credit ratings are useful for accounting fraud prediction. We find that negative rating actions by Standard & Poor’s (S&P), an issuer-paid credit rating agency (CRA), have predictive ability for fraud...

... accounting fraud inadvertent accounting errors We thank Joseph P. Weber (editor) and two anonymous referees for constructive suggestions. We also gratefully acknowledge the insightful comments of Lucile Faurel, John Kepler, Yan Li, Angela Pettinicchio, and workshop participants at Bocconi...

... after including most of the firms accused of accounting fraud. CRMs that receive private investment in public equity (PIPE) financing from sophisticated investors perform particularly well. Overall, despite the negative publicity, we find little evidence that CRMs are inherently toxic investments. Our...