Stock market rating agencies are organizations that provide ratings for the financial strength of publicly traded companies. The ratings can be used by investors when making decisions about what stocks to buy or sell.
Standard & Poor’s, Moody’s, and Fitch are the most well-known rating agencies.
The ratings provided by these agencies are not always accurate, and they have been criticized for giving high ratings to companies that later collapsed. However, the ratings can still be useful when used as one piece of information among many when making investment decisions.
When considering whether to buy or sell a particular stock, investors should research the company thoroughly and consider all available information before making a decision. The ratings provided by stock market rating agencies can be one helpful piece of information, but they should not be the only factor considered.
Stock Rating Agencies Scandals
Stock market rating agencies have been in the news because of their role in the financial crisis. Investors rely on these agencies to rate stocks and bonds, and it’s been revealed that some of these agencies were giving high ratings to securities that were junk. This caused a lot of investors to lose a lot of money when the housing market collapsed.
The rating agencies are under scrutiny because they need to be more transparent and accountable for their actions.