Why do ratings differ? - a political economy approach to explain the difference in corporate ratings issued by global rating agencies and national rating agencies.

Abstract

In this paper I provide a theoretical framework explaining why corporate ratings issued by global credit rating agencies differ from those issued by national credit rating agencies. I particularly focus on methodological differences between Japanese rating agencies and the "Big Three" global rating agencies and on implications for Chinese corporate ratings. Drawing on the political economy concept "varieties of capitalism" I argue that corporate ratings differ due to the usage of distinct rating methodologies that are ultimately determined by varying corporate ownership structures of both the global and the national rating agencies' home countries.