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Some economists have argued that one important role of ratings agencies is to keep the managers of firms that issue bonds from using the funds raised in ways that would not be in the best interests of the purchasers of the bonds.

Why might the managers of firms have different goals than the investors who buy the firms bonds?

How does the existence of rating agencies reduce this conflict between investors and firm managers?

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92060048

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