The Credit Rating of Listed Company Quality Inspection in China: Based on the Perspective of Corporate Profitability

Abstract

Using a sample of bonds issued by non-financial listed companies during 2007-2015, we study the credit rating quality from the perspective of profitability. Results show that credit rating in China has a weak riskiness discriminatory power on company’s profitability and it affects differently amid various sectors. Central state-owned companies have a strong riskiness discriminatory power, whereas this power is comparatively lower among local state-owned companies and private enterprises and other sectors needed to advance funds in the early stage, such as the real estate sector.