Yuan Xie examines intraday timing of S&P rating changes

Professor Yuan Xie’s co-authored paper, “The intraday timing of rating changes,” was published in 2019 in the Journal of Corporate Finance. The authors examine time stamps of Standard & Poor's rating changes, finding that although most rating changes occur during trading hours, the proportion of downgrades announced after regular trading hours is higher than that of upgrades. In addition, unexpected after-hour downgrades are associated with more negative stock returns and lower trading volume in comparison to those announced during trading hours.

They also find that S&P is more likely to announce downgrades after hours when downgrades are released on busy days with many concurrent rating announcements, when they concern financial firms, and when they are unexpected. In addition, they find that Egan-Jones Ratings (an investor-paid credit rating agency) demonstrates a similar tendency in announcing downgrades after trading hours. The findings suggest that S&P announces downgrades after trading hours to better disseminate information, and thus have important policy implications.