The Research On The Interest Conflict Of Credit Rating Based On The Theory Of Reputation

At the end of2007,the The U.S. subprime mortgage crisis broken out. One of theimportant ammunition that is three rating agencies including Moody,standard&poorand fitch ratings to pursue excess profit to provide the virtual high credit rating leve.At the same time,because of the asymmetric information,investors will be based onvirtual high credit rating level made the wrong decisions,so as to make their ownloss.As a result,the reputation of the rating agencies will be severely affect,and theirprofit,also will decline.In this conflict，reputation became a effective factors to restrictthe rating agencies get excess profits.Based on the Principal-agent theory, reputation theory and oligopoly theory, thisarticle defines the conflicting relationship between investors and rating agenices in thecredit ranting market,and analyzed the cause of the conflict of interest from creditrating charging system, construction of rating products,and system defect.On theoriginal reputation premium model’s guard,this paper import a newβfactor in themodel to reflect the change of reputation capital,so that the adjustment of theassumption of the model in this paper can be more tally with the actul situation.Afterthat,based on the new reputation premium model,the paper explored that whether thecredit agencies will provide the virtual high credit rating leve for the short-term profitin their process of pursuiting profits and reputation capita with the influence ofβfactor.According to moody’s annual revenue and net profit last12years before thecrisis,and it’s net profit and revenue quarterly date after the crisis,this paper describedthe reputation capital recovery process of credit rating agencies,after their products ofvirtual high credit rating leve have been sold.Then from the credit rating monopolysituation which is the existing overall market,analyzed the serious influence to theinterest conflict problem when the strategic of three major credit rating agencies tendto be correspondency.At last,some suggestion for the reputation mechanism have begiven.