Lead-lag relationships and rating convergence among credit rating agencies

Using a sample of corporate issuers rated by Moody's and Standard & Poor's (S&P) for the years 1994-2005, we find evidence that Moody's rating migration rates are higher given a rating change by S&P. This seems to be tentative evidence that S&P assigns ratings in a timelier manner than Moody's. Furthermore, we find that the tendency toward rating convergence is stronger for Moody's than for S&P. Our findings are important given the concerns regarding the agencies' inherent incentives and their dominant market position.