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

Wei, Tian; Zhou, Xiangyun; Tian, Yuan; Meng, Wei

doi:10.1371/journal.pone.0232804

Cited by 2 publications

(2 citation statements)

References 27 publications

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“…Based on [ 21 , 27 ], a few researchers have utilized the ordered logit model to study corporate bond ratings. The construction of the panel ordered logit model is shown in [ 28 ]. Therefore, we utilize panel ordered logit models to examine the regulatory effects of the single, dual, and multi-rating regulations on Chinese corporate bond ratings.…”

Section: Empirical Analysismentioning

confidence: 99%

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Can the dual-rating regulation improve the rating quality of Chinese corporate bonds?

Zhou

2021

PLoS ONE

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We developed a dual-reputational rating shopping model to introduce public and institutional reputations. Investor’s and regulator’s penalty rates are described as public and institutional reputations, respectively. We achieved the available conditions of single-rating and dual-rating regulations to prevent rating inflation in this model. To examine the regulatory effects of different types of regulations on Chinese corporate bond ratings, we utilize panel ordered logit models. Theoretical analysis and empirical tests show that, when the reputation effect is low, the single-rating regulation is better at improving rating quality, and when the reputation effect is high, the dual-rating regulation induces rating agencies to provide more accurate ratings. Compared to the regulatory effects of the single-rating and the multi-rating regulations, the dual-rating regulation most effectively improves the rating quality of corporate bonds and prevents rating inflation.

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Section: Empirical Analysismentioning

confidence: 99%

“…To further illustrate the robustness of the results, we utilized the regression results for the models that did not include control variables as the control group [ 28 ]. We directly examined the effects of different rating regulations on rating upgrades, rating downgrades, the efforts of rating agencies, and rating defaults.…”

Section: Empirical Analysismentioning

confidence: 99%

Can the dual-rating regulation improve the rating quality of Chinese corporate bonds?

Zhou

2021

PLoS ONE

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The framework of Hammer (CAFÉ) credit rating for capital markets in China with international credit rating standards

Yuan

Liu³

et al. 2023

Manage Decis Econ

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The goal of this paper is to discuss how we establish the so‐called “Hammer (CAFÉ) Credit System” by applying the Gibbs sampling algorithm under the framework of a big data approach supported by both traditional structured and unstructured data as a breakthrough, in particular, to extract those highly related risk features in depicting default (bad) events and related fraudulent behaviors (action) by following the “five step principle” incorporated with the international credit rating standards in the practice. The analysis shows that our Hammer (CAFÉ) Credit System is able to handle current three issues raised by the credit rating business for capital markets in China, which are as follows: (1) The rating is falsely high, (2) the differentiation of credit rating grades is insufficient, and 3) the performance in predicting early warning and related issues is poor. In addition, the Hammer (CAFÉ) credit discussed in this paper is supported by clearly defining the “BBB” grade rate as the basic investment level associated with the annualized rate of default probability, and the credit transition matrix for “AAA‐A” to “CCC‐C” credit grades in accordance with international standards used in the practice of risk management and decision services.

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

Cited by 2 publications

References 27 publications

Can the dual-rating regulation improve the rating quality of Chinese corporate bonds?

Can the dual-rating regulation improve the rating quality of Chinese corporate bonds?

The framework of Hammer (CAFÉ) credit rating for capital markets in China with international credit rating standards

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