A Study On The Objectivity Of Rating Of External Credit Rating Institutions

This dissertation aims to evaluate the objectivity of the external credit rating agencies as well as give the policy recommendations by sorting out the historical logic of the development of external credit rating agencies, building the theoretical framework of the objectivity of the external credit rating agencies, testing the objectivity of the external credit rating agencies, and discussing the institutional arrangements of the external credit rating agencies. On sorting out the historical logic, the dissertation compares the rating performances before and after the government intervention upon the external credit rating industry. On building the theoretical framework, the dissertation proves the necessity of the existence of the external credit rating agencies by financial intermediation theory, and finds out three factors which influence the objectivity of the external credit rating agencies by building the rating result choice model of external credit rating agencies. The three factors are the rating business income, the probability of default and the importance of the reputation. In the empirical test section, the dissertation compares the rating results from credit rating model of Moody’s and the domestic credit rating agencies. The comparison shows that the ratings from domestic credit rating agencies are much higher than the results from credit rating model of Moody’s, and the rating standard for state-owned enterprises is lower than the standard for any other enterprises. Besides, the result by KMV model which is based on the market confirms the rating result by credit rating model of Moody’s which is based on the financial result of the enterprise. On discussing the institutional arrangement, the dissertation finds out four factors which influence the objectivity of the external credit rating agencies.