An examination of rating agency explanations for credit rating changes in the hospital sector

An examination of rating agency explanations for credit rating changes in the hospital sector

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Article ID: iaor200437
Country: United States
Volume: 15
Issue: 2
Start Page Number: 176
End Page Number: 201
Publication Date: Jan 2003
Journal: Journal of Public Budgeting, Accounting and Financial Management
Authors:
Keywords: management, health services, finance & banking, statistics: regression
Abstract:

This study examines rating agency explanations that accompany changes in credit ratings for nonprofit hospitals. A national sample of Standard & Poor's revision announcements is used to identify hospital characteristics that purportedly motivate credit rating changes. Significant differences in agency-cited performance dimensions, such as profitability, liquidity, service-mix, capital structure and market share, are observed across upward and downward revisions. The relative usefulness of these citations for explaining and classifying credit changes is also evaluated. The result suggest that agency explanations provide limited value relative to conventional, multivariate information sets.

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