It has been a puzzle why foreign firms obtain credit ratings by global rating agencies such as S&P or Moody's rather than from their home country's rating agencies even though the global raters typically assign lower credit ratings when these foreign firms issue bonds in their home currencies....

The SEC’s NRSRO designation for Japanese credit rating agencies is suitable for examining certification and monitoring effects, as Japanese domestic bond markets are not subject to SEC regulations. We find that the certification increased the market share of new NRSROs (R&I and JCR) compared...