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Korean Academic Society of Business Administration
[ Article ]
korean management review - Vol. 53, No. 2, pp.321-344
ISSN: 1226-1874 (Print)
Print publication date 30 Apr 2024
Received 21 Nov 2023 Revised 01 Feb 2024 Accepted 02 Feb 2024
DOI: https://doi.org/10.17287/kmr.2024.53.2.321

정성적 신용평가요소가 신용등급 불일치에 미치는 영향

Dongchang Kang ; Jeong-Taek Kim
(First Author) Associate Professor, Department of Accounting & Taxation, Dongyang Mirae University / Ph.D. Candidate, Accounting Part, Business Administration, Sogang University eastwindow72@daum.net
(Corresponding Author) Assistant Professor, School of Business Administration, Dankook University jtkim01@dankook.ac.kr
An Analysis of Credit Rating Agency’s Rating Adjustments Effects on Rating Split


Copyright 2024 THE KOREAN ACADEMIC SOCIETY OF BUSINESS ADMINISTRATION
This is an open access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

This study investigates how credit rating agency's qualitative rating adjustments factors(Rating Deviation) in the credit rating process for corporate bond affect the discrepancy in opinions among credit rating agencies(Rating Split). In an empirical analysis using Korean listed companies from 1998 to 2022, our findings can be summarized as follows. First, the absolute value of Rating Deviation exhibits a positive association with the likelihood of Rating Split among multiple credit rating agencies. This suggests that a greater incorporation of qualitative rating adjustments factors in credit rating assessments leads to a higher likelihood of rating disparities among credit rating agencies. Second, the raw value of Rating Deviation is negatively associated with the likelihood of Rating Split, suggesting that the probability of Rating Split increases when a credit rating agency take a conservative approach in their qualitative assessment. This study extends related research by exploring the causes of rating disparities among multiple agencies through the rating mechanism per se, rather than the perspective of information asymmetry.

Keywords:

Rating Deviation, Rating Split

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∙ The author Dongchang Kang is an Associate Professor, Department. of Accounting & Taxation, Dongyang Mirae University. He is also a Ph.D candidate in Business Administration at Sogang University. As a certified public accountant (KICPA&USCPA), he worked for Samil PwC, An-Jin DTT and Korea Investors Service. Dongchang Kang’s research interests are Credit Rating, Corporate Governance, and Disclosure.

∙ The author Jeong-Taek Kim is an assistant professor at Business Administration of Dankook University. He received a Ph.D degree from Korea University and his research interests include ESG, credit ratings, and auditing.