Disclosure in Markets for Ratings

Ran Weksler, Boaz Zik

Research output: Contribution to journalArticlepeer-review


We study the implications of the disclosure regime of ratings on the level of information released to the public. Specifically, we compare mandatory and voluntary disclosure. We analyze a model where the potential issuers are initially endowed with homogeneous soft information about their values before paying to acquire ratings. We find that for every accuracy level of the issuers’ initial information, voluntary disclosure results in a more informative equilibrium than mandatory disclosure. This finding identifies a dimension in which the existing European Union regulations that impose the mandatory disclosure of ratings may lead to a loss of information to the public.

Original languageEnglish
Pages (from-to)501-526
Number of pages26
JournalAmerican Economic Journal: Microeconomics
Issue number3
StatePublished - 2023

Bibliographical note

Funding Information:
*Weksler: University of Haifa, Department of Economics (email: rweksler@econ.haifa.ac.il); Zik: Reichman University (IDC Herzliya), Tiomkin School of Economics (email: bzik@runi.ac.il). Leslie Marx was coeditor for this article. We are grateful to three anonymous referees for their helpful feedback and valuable comments. We also thank Elchanan Ben-Porath, Alex Gershkov, and Benny Moldovanu. Zik wishes to express his gratitude to the Institute for Microeconomics at the University of Bonn, his employer while he worked on this paper, and also gratefully acknowledges funding by the German Research Foundation (DFG) through CRC TR 224 (Project B01).

Publisher Copyright:
© (2023). All Rights Reserved.

ASJC Scopus subject areas

  • Economics, Econometrics and Finance (all)


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