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Short-term competition and long-term convergence between domestic and global rating agencies: Evidence from China

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  • Wei Tian
  • Xiangyun Zhou
  • Yixiang Tian
  • Wei Meng

Abstract

This article adds to the existing literature on global rating agencies (GRAs, i.e., the S&P, Moody’s, and Fitch) and domestic rating agencies (DRAs). In our research, we introduce the reputation, rating cost and rating accuracy of rating agencies to improve the Hotelling model. According to the theoretical analysis and empirical tests, the results show that the open policy of the Chinese rating industry contributes to higher rating quality in the domestic bond market. This open policy leads to rating convergence between DRAs and GRAs from in the long term.

Suggested Citation

  • Wei Tian & Xiangyun Zhou & Yixiang Tian & Wei Meng, 2020. "Short-term competition and long-term convergence between domestic and global rating agencies: Evidence from China," PLOS ONE, Public Library of Science, vol. 15(5), pages 1-15, May.
    • Handle: RePEc:plo:pone00:0232804
    DOI: 10.1371/journal.pone.0232804
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    References listed on IDEAS

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