Description

About the Seminar

Although Credit Rating Agencies are fundamental to market stability, the prevailing literature’s preoccupation with quantitative rating outcomes has left the “soft information” within qualitative disclosures largely unexamined. This study shifts the focus toward the strategic disclosure embedded within the textual content in Chinese bond rating reports. Using a sample of approximately 9,300 Medium-Term Note (MTN) reports and sentiment analysis methods (Bag-of-Words (BoW) and Large Language Models, we document that CRAs recalibrate the textual sentiment of their rating reports to reflect exogenous shocks in market, regulatory and legal risks. We provide evidence that when letter grades are rigid, the qualitative narrative becomes the critical margin provider of valuable information, offering a more granular communication of risk to the market.

About the Speaker

Wenming Xu is a Professor and Dean of School of Law and Economics at China University of Political Science and Law (CUPL), and an Editor of the International Review of Law and Economics. He obtained his Undergraduate Degree in Economics (magna cum laude) and Master of Law from CUPL, and Ph.D in Law and Economics from the University of Bologna in Italy. Professor Xu has visited the University of Oxford, the Max Planck Institute for Comparative and International Private Law, the University of Chicago, the Northwestern University, and the National University of Singapore. His scholarship mainly focuses on empirical legal studies, corporate law and finance, financial law and regulation. Professor Xu has published more than 30 articles in both international and Chinese peer-reviewed journals, including International Review of Economics and Finance, International Review of Law and Economics, European Business Organization Law Review, and European Journal of Law and Economics.