 What role does the investor-paid rating agency play in China? Competitor or information providerYu-Li Huang and Chung-Hua Shen International Review of Economics & Finance, 2019, vol. 63, issue C, 253-272 Abstract: This paper investigates whether an investor-paid rating agency plays the role of a competitor or an information provider in China. We find that the incumbent issuer-paid rating agencies regard the investor-paid rating agency, the China Bond Rating Company, Ltd. (CBRC), as a competitor. They are more likely to downgrade or less likely to upgrade ratings when the CBRC also covers the issuer. Further, the information quality of the ratings improves for the issuers that CBRC also covers. We also find that the investor-paid agency plays the role of an information provider. CBRC's rating grades and their difference with issuer-paid rating agencies can explain bond yield spreads. We further find that the effects of the improvement in the quality of the information behind the ratings are consistent for CBRC's solicited and unsolicited ratings. Keywords: Credit rating; Issuer-paid rating agency; Investor-paid rating agency; Competition; Information provider (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:63:y:2019:i:c:p:253-272 DOI: 10.1016/j.iref.2018.11.007 Access Statistics for this article International Review of Economics & Finance is currently edited by H. Beladi and C. Chen More articles in International Review of Economics & Finance from Elsevier |
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