Research On Reputation Effects Of Rating Agencies In China

The reputation of the rating agency is the most important capital for its role as a “gatekeeper” in the securities market.In China’s bond credit rating market,there are problems such as regulatory disorder,insufficient importance of ratings,vicious competition between institutions,and insufficient exposure of credit risks.Ma Wei et al.(2015)found that the screening ability of China’s credit rating is weak.Ruan Zonglai et al.(2015)found that there is a rating inflation in China’s credit rating results,and it does not significantly reduce the financing cost of bonds.Based on these objective problems and existing research conclusions,whether the reputation of China’s bond credit rating agencies still has theoretical effects has become the focus of this paper.Due to the availability of data,this paper defines credit rating agencies as bond credit rating agencies.At the same time,the medium-term notes issued in 2014-2018 are the research objects,and the rating agencies and the rating agencies are rated after the default.The two aspects of reputation change are studied.This paper selects market share as the measure of bond credit rating and institutional reputation,and puts forward two hypotheses about the reputation effect of China’s rating agencies,and sets up two measurement models.Finally,two conclusions are obtained through empirical research:(1)The reputation of China’s credit rating agencies has a reputation for the Matthew effect,that is,the higher the reputation in the early stage,the higher the reputation in the later stage;(2)the reputation has a stabilizing effect on the continuity of the reputation,but the reputation of the bond issuance spread,the reputation Does not have a stabilizing effect.Research on the reputation of rating agencies,especially rating agencies,is still in its infancy.Based on the research of predecessors,this paper makes theoretical innovations and quantitative analysis methods to make two innovations:(1)By selecting the substitution variables,the law of the reputation of China’s credit rating agencies is studied.Therefore,it is found that the reputation of the rating agencies has the law of “stronger and stronger”,which verifies the Matthew effect of reputation;(2)this paper introduces the default of rating bonds.To study the reputation effect of rating agencies.Previous studies have shown that when rating agencies are involved in default,the market performance of rating agencies will be affected.This paper analyzes the reputational stability of China’s reputation rating agencies by setting up a cross-variation between reputation and default to explore the relationship between reputation and default.However,there are three shortcomings in this paper:(1)There is no more accurate measure of the substitution variable of the rating agency’s reputation;(2)This article does not test the reputation effect in all aspects,only the specific performance of it.Forms are tested;(3)This paper only studies the medium-term bill market,and does not test the reputation effect of rating agencies in the overall market or various market segments of China’s bonds.