Short-term competition and long-term convergence between domestic and global rating agencies: Evidence from China

PLoS One. 2020 May 21;15(5):e0232804. doi: 10.1371/journal.pone.0232804. eCollection 2020.

Abstract

This article adds to the existing literature on global rating agencies (GRAs, i.e., the S&P, Moody's, and Fitch) and domestic rating agencies (DRAs). In our research, we introduce the reputation, rating cost and rating accuracy of rating agencies to improve the Hotelling model. According to the theoretical analysis and empirical tests, the results show that the open policy of the Chinese rating industry contributes to higher rating quality in the domestic bond market. This open policy leads to rating convergence between DRAs and GRAs from in the long term.

Publication types

  • Research Support, Non-U.S. Gov't

MeSH terms

  • Capital Financing / classification
  • Capital Financing / economics*
  • China
  • Humans
  • Investments / classification
  • Investments / economics*
  • Organizations / classification
  • Organizations / economics*
  • Policy

Grants and funding

Wei Meng recevied China’s Post-doctoral Science Fund 《Research on the method of the prediction system of self-adaptive fractional grey》(W03019023601004031) and Yixiang Tian received Sichuan Province Training Project of Academic and Technological Leaders in 2016 (Y02028023601044). Yes. Tian Yixiang played a role in the decision to publish. Wei Tian played a role in data collection. Wei Meng played a role in data analysis.