Research On The Influence Of Market Structure Of Credit Rating Industry On Rating Quality

As the "gatekeeper" of the financial market,rating agencies have accumulated a large amount of reputational capital.They should take the realization of investors' interests as their ultimate goal,provide investors with accurate rating information,and thus reduce the information asymmetry of the market,so as to maintain their reputational capital.Since the real default of chaori bonds in 2014,the rigid payment in China's bond market has been gradually broken,and the number of bond defaults has been on the rise.Some bonds were rated highly even before they defaulted,raising questions among investors about the role of rating agencies and the quality of ratings.The influencing factors of rating quality mainly include competition and reputation,payment method and regulation,etc.There is no conclusion on the influence of competition on rating quality at home and abroad.This paper will study the influence of market competition in the rating industry on rating quality.This article mainly by the industrial organization theory,the "gatekeeper" theory and principal-agent theory as theoretical basis of research,research on rating quality rating industry market structure and behavior,a rating agency,first using the method of literature carding quality of credit rating and rating market competition related literature research methods and conclusions,the study theoretical basis and put forward hypothesis,once again to our country the present situation of the rating industry market structure analysis,finally USES the empirical analysis using Ordered logit model and OLS model for issuing corporate bonds and corporate bonds in 2011-2018 data for analysis.In empirical analysis,respectively with direct inspection and indirect test method of rating industry competition on the quality of the ratings,direct influence to test the level of competition on ratings,indirect to test the effectiveness of the competition on ratings,the effects of competition between safely draw the conclusion that the rating agencies to make the rating and the correlation of credit spread,isadvantageous to the credit rating reduce financing cost;Further analysis the heterogeneity behavior of rating agencies,according to the rating agencies' market share and presence of foreign-shared two factors could be divided into high reputation rating agencies group and low reputation,finally concluded that high reputation rating agencies have higher ratings,competition on rating artificially high inhibitory effect is not obvious,but indirect inspection found that high reputation rating agencies face competition,rating for carry lower effect is bigger,so the analysis,the market investors cannot effectively identify high reputation rating agencies virtual behavior,so will not demand a higher interest rate differentials,And issuers looking for reputable rating agencies can lower funding costs more effectively.The two rating agencies in the high reputation group are those with foreign equity participation,which indicates that investors have more trust in the rating agencies with foreign equity participation,so they fail to timely identify the behavior of their inflated rating.In the end,this paper concludes that the market structure of China's rating industry is monopolistic and competitive,and the degree of competition has a positive impact on the quality of rating.The phenomenon of rating inflation is more serious in reputable rating agencies,and investors cannot effectively identify their behavior of rating inflation.