ECONOMICS REPORT - What's in a Name: Standard and Poor's

ECONOMICS REPORT - What's in a Name: Standard and Poor's
By Mario Ritter

Broadcast: Friday, September 02, 2005

I'm Barbara Klein with the VOA Special English Economics Report.

 
The Standard and Poor's 500 Index is one of the most important measures of the stock market
Recently, a listener from China asked why the financial company Standard and Poor's has a name that includes the word "poor." In Chinese culture, businesses have names that suggest success and wealth.

In Western countries, however, businesses often carry the names of the people who started them. And that is partly the case with Standard and Poor's.

It was formed when two companies joined together. One was Poor's Publishing Company. Henry Varnum Poor started the company in the eighteen sixties. He published a number of books on railroads, money and business. He also published financial information about companies for investors 1.

In nineteen-oh-six, the Standard Statistics Bureau was formed to provide financial information about American companies. It recorded numerical information, or statistics, about businesses. In nineteen sixteen, the Standard Statistics Bureau started offering credit ratings for companies. Ratings are designed to give investors an idea of how likely it is that a business will pay its debts. Soon after, the company offered credit ratings for nations. It later offered the same service for local governments.

Poor's Publishing Company joined with the Standard Statistics Bureau in nineteen forty-one to form Standard and Poor's. In nineteen sixty-six, the publishing company McGraw-Hill bought Standard and Poor's. Since then, it has grown as an important provider of information on credit and business statistics.

Standard and Poor's also developed an important measure of the stock market. The S and P Five Hundred Index is a list of five hundred companies. The price of ownership shares of these companies is combined with other information. Mathematic operations are used to create a single number that shows if all stocks on the list have gained or lost value.

Standard and Poor's says the S and P Five Hundred Index is the best, single measure of the United States stock market. Only American companies are on it. They must be financially strong and have a total stock value of more than four thousand million dollars. The companies are also chosen to represent the importance of industries to the economy.

Standard and Poor's remains 2 one of the world's two leading credit rating agencies. The other is Moody's.

This VOA Special English Economics Report was written by Mario Ritter.  I'm Barbara Klein.