An empirical examination of the informational content of credit ratings in China

Winnie P.H. POON, Kam C. CHAN

Research output: Journal PublicationsJournal Article (refereed)peer-review

46 Citations (Scopus)


We examine the certification effect of initial rating announcements and the signaling effect of rating downgrade announcements in China using a pooled time-series cross-sectional issuer rating data of 170 companies listed on the Shanghai and Shenzhen Stock Exchanges from 2002 to July 2006. The empirical evidence supports our hypothesis of an asymmetric certification effect. Consistent with the literature, we also find some negative signaling effects in our rating downgrade sub-sample. Overall, although there are some qualitative arguments that credit ratings in China do not have information content, our empirical findings suggest otherwise. When a normally positively biased rating agency gives a low rating, it is valuable news to market participants.
Original languageEnglish
Pages (from-to)790-797
Number of pages8
JournalJournal of Business Research
Issue number7
Publication statusPublished - 1 Jul 2008


  • China
  • Credit ratings
  • Informational content

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