Double Principal-agent,Incomplete Information and Distorted Ratings

The sub-prime crisis has exposed many inherent flaws of the current credit rating mechanism which is primarily dominated by credit rating agencies.The double principal-agent model has theoretically outlined the interactive relationships among the investors,issuers and the rating agencies during the rating process.Conclusions are drawn that the rating results must be based on co-working between the issuers and the rating agencies,that authentic and reliable information provided by issuers is the basis for a true and credible rating,and that the different rating purposes from the issuers have a direct impact on the rating results,etc.