Foreign Investment, Reputation and the Predictability of Chinese Credit Ratings

DOI

10.2991/aebmr.k.201211.056How to use a DOI?

Keywords

Sino-foreign credit rating agencies, credit rating, rating adjustment, reputation effect

Abstract

This study examines how foreign investment in Chinese credit rating agencies affects the predictability of Chinese bond market ratings from January 1, 2013, to June 30, 2019. Empirical results show that the latest rating issued by both domestic and Sino-foreign rating agencies can reflect the probability of default, at least that of default in rating day. Furthermore, rating agencies with large market shares downgrade ratings to speculative grade near the day of default, even downgrading on the day of default. Reputation effects may prompt rating agencies in which foreign companies invest or with whom they cooperate to downgrade ratings sharply.

Copyright

© 2020, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

Download article (PDF)

TY  - CONF
AU  - Xing-yue Zhan
AU  - Chao-hung Yu
PY  - 2020
DA  - 2020/12/14
TI  - Foreign Investment, Reputation and the Predictability of Chinese Credit Ratings
BT  - Proceedings of the Fifth International Conference on Economic and Business Management (FEBM 2020)
PB  - Atlantis Press
SP  - 333
EP  - 344
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.201211.056
DO  - 10.2991/aebmr.k.201211.056
ID  - Zhan2020
ER  -