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The use and importance of ratings
are expected to increase dramatically with the information revolution.
Decision-makers will continue to find themselves overloaded with information
and will consequently seek means to solicit opinions and rank alternatives.
Ratings now range from those assigned by AAA to hotels and motels, to
Standard & Poor’s ratings on financial instruments, to the
Zagat Survey for restaurants. More recently, the Internet has
spawned the creation of rating systems, but such systems are still targeted
largely at consumer products and do not yet discriminate between sources
of opinion. Additionally, when scrutinized for methodological rigor,
many current systems fail basic tests required to ensure objectivity
and independence. By virtue of their summary format, ratings are ideally
suited to electronic distribution, lend themselves readily to computer
search and manipulation, and are easily understood and applied, irrespective
of a user's education or native language (i.e., ratings are “culture
independent”). The most successful rating systems (e.g., J.D.Power,
Moody’s, Nielsen Media, S&P) have at least four characteristics
in common:
- The systems depend on the use of experts, who are perceived as
making independent, impartial, and reliable judgments with respect
to the relevant subject matter.
- The systems’ ratings and rating changes are expressed in summary
format, are disseminated publicly, and are perceived as valuable news,
thereby generating significant brand recognition and influence.
- The systems’ ratings and rating changes have a measurable
financial impact upon rated companies' sale of goods and services
or cost of capital, or both, as the case may be.
- The systems serve the needs of institutional customers.
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