IESE Professor Researches Credit Agency Diligence

The Accounting Review publishes study led by Stanford, IESE and Wharton faculty members


IESE Prof. Gaizka Ormazabal has participated in a newly-released study on credit agency diligence, published this month in The Accounting Review of the American Accounting Association.

The study examines evaluations of the credit-worthiness of large bank holding companies and identifies how risk was assessed in significantly different ways by the bond market and the major credit-rating agency, Standard & Poor's.

The study was carried out by Mary E. Barth of Stanford University, along with Prof. Ormazabal and Daniel J. Taylor of the Wharton School of the University of Pennsylvania.

"It's not surprising that we encountered two markedly different ways of assessing risk given the continuing disagreement among accountants as to whether asset securitizations most fundamentally are sales or collateralized borrowings," says Barth in an interview with, which has highlighted the study.

In the study, the authors found that "the securitizing firm's credit risk is positively related to the firm's retained interest in the securitized assets and unrelated to the portion of the securitized assets not retained by the firm."