Introducing foreign credit rating agency in China: Enhancing reputation or aggravating conflicts of interests?

Mingming Li, Huaichang Yang and Haiming Liu

Finance Research Letters, 2025, vol. 73, issue C

Abstract: This paper investigates the impact of China's openness policy for the credit rating industry on credit ratings by domestic credit rating agencies (CRAs). Our findings demonstrate that the introduction of foreign CRAs reduces credit rating levels by domestic CRAs. Heterogeneity tests show that this effect is more pronounced when the issuers are small or unlisted, the CRA's market share is lower, or the underwriter's reputation is lower. Finally, openness to foreign CRAs can enhance the information content of credit ratings by domestic CRAs. Our results illustrate that openness to foreign CRAs enhances the reputation concerns of domestic CRAs.

Keywords: Credit rating; Foreign CRAs; Reputation concerns (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612324016726
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:73:y:2025:i:c:s1544612324016726

DOI: 10.1016/j.frl.2024.106643

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().