Posted in Finance, Accounting and Economics Terms, Total Reads: 352
Definition: Egan-Jones Rating Agency
Also known as EJR, this rating company was founded in 1995 by Sean Egan and Bruce Jones to provide accurate and on- time ratings of various firms. The company gained reliability after they successfully rated the failures of Enron and WorldCom companies. It is considered as a leading provider of ratings.
It is a Nationally Recognized Statistical Ratings Organization (NRSRO) and is a recognized Credit Rating Provider. It also provides a “Hits and Misses” figure which gives an indication of the accuracy of the reports provided by EJR. The following table shows the hits and misses of the company over the previous years.
There are various companies rated such as Mc Donald’s Corp, Coca- Cola Enterprises, Imperial Oil Ltd etc.
It also rates the credit worthiness of more than 2000 high yield and high grade US Corporate debts. Different other institutions such as Stanford University Business School and Kansas City Federal Reserve check the effectiveness of the company’s ratings. The different ratings given are AA+ (Excellent), AA (Very Good), AA- etc.
It gives a new business model paid for by investors and not issuers to support the funding ecosystem in the US. Egan- Jones alerts investors about the corporate credit problems even before they are disclosed by the corporate companies.
For example, Egan- Jones cut its rating of WorldCom down to the lowest grade after observing its decreasing profits and credit quality. Three months later, WorldCom was filed for bankruptcy. Enron’s rating was downgraded a month before Moody’s had spotted the company’s credit quality.
Egan- Jones Proxy Services was established in 2002 as an independent provider of proxy research, voting recommendations and voting services to different institutional investors. It offers all clients about its recommendations based on proxy voting guidelines chosen by the client and is adjusted to the company- specific information.