Does It Matter Who Owns Moody's?

Following its IPO in 2000, Moody's had two shareholders, Berkshire Hathaway and Davis Selected Advisors, who collectively own about 23.5% of Moody's from 2001 to 2010, the entire sample period. Moody's ratings on corporate bonds issued by important investee firms of these two stable large shareholders were more favorable relative to S&P's ratings. Moody's relatively favorable ratings are increasing in the size and duration for which large shareholders hold the investee firms. The results cannot be explained by issuer characteristics or by greater informativeness of Moody's ratings. These findings are consistent with regulatory concerns about the public ownership of credit rating agencies.