HAVE RATING AGENCIES BECOME MORE CONSERVATIVE? EVIDENCES

Beginning in 2008, rating agencies have loosen their rating criteria of Chinese corporate bond rating. The change in rating standard remains statistically significant after considering the macroeconomic factors. A lack of diversification in ratings and failure to rate through economic cycle are found. As for the factors that have impact on the rating, Bigger size, higher profitability and better solvency help increase the rating for a corporate bound issuer, while higher liquidity, and lower leverage do harm to the credit rating. Such discoveries are consistent with the consitions in US corporate debt market. Our conclusion is robust after multicollinearity test and adding additional macroeconomic explanatory variables.