In order to increase market share and attract customers, institutions must improve their bond ratings to be competitive. Moyer et. al. (2014). Resolving conflict of interests between financial institutions (bond rating agencies) will enhance stakeholders’ impartiality. A buy-side analysis is a way for institutions to avoid conflict of interests. The buy-side analysis is a way to draw objective conclusions about a company’s credit rating and bond rating. Organizations can perform a Buy-side Analysis to determine their creditworthiness, financial condition and other factors using evidence-based methods and verified data. Without credible data, rating agencies and financial institutions cannot avoid negative consequences. Different data can be used to help institutions make relevant stock recommendations.
Similar to institutions, they may also be able to evaluate dependability through comparing buy-side and sell-side results. This sell-side analysis allows rating agencies to rate firms according to their predicted profits growth. Conflicts of Interest can be decreased by using multiple theories and comparing correlation analysis results. Bipartisan parties may be used by the institution to create objective links among institutions. The Securities and Exchange Commission may be used by credit rating agencies and financial firms to select institutions’ credit rating agencies. SEC keeps a directory of qualified editors which they can call to verify the accuracy of ratings for financial institutions and agencies (Neate (2011)). SEC will only choose institutions that are reliable and precise. To be eligible for more contracts, the SEC will require that each institution is rated objectively and reliable. Their chances of being approached to provide comparable services would be reduced if they offer subjective conclusions. SEC also established strict criteria that would ensure agencies are able to provide credit ratings.
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