Did More Disclosure Make India’s Credit Ratings Less Reliable?
Featuring Sanjay Kallapur and Hariom Manchiraju
When SEBI's transparency mandate set out to fix a credibility problem, firms adapted in ways regulators did not anticipate.
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Sanjay Kallapur
Professor of Accounting. His research spans financial and managerial accounting, auditing, corporate governance, and risk management. He also served as the Associate Dean and the Deputy Dean at ISB for nearly a decade.
Hariom Manchiraju
Associate Professor of Accounting at the Indian School of Business (ISB). He holds a PhD and an MBA from the State University of New York – Buffalo, a Master of Financial Management (MFM) from Sri Satya Sai University, India, and Bachelor’s degree in Commerce from Osmania University, India.
Key Takeaways
- SEBI’s disclosure rule did not prevent companies from trying to appear more creditworthy than they were.
- Firms adapted by turning to more lenient rating agencies to secure favourable credit ratings.
- Policymakers should recognise that transparency alone may not fully solve the problem of declining rating quality.