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Open government data and the cost of debt

Author

Listed:
  • Xing, Qiuhang
  • Xu, Gaoshuang
  • Wang, Yanping

Abstract

Open government data refers to a government's policy of disclosing available data to society. Using China's policy of disclosing open government data, which has been progressively implemented, this paper investigates whether open government data affect the cost of debt for firms. We find that open government data can alleviate information asymmetry between creditors and firms, in turn significantly reducing the cost of debt for firms. This effect is pronounced in high-risk firms that creditors perceive to be engaging in opportunistic behavior, small firms, and regions with underdeveloped fintech or where the legal environment is not sufficiently protective of creditors. Furthermore, we find that the maturity of open government data contributes to its reducing effect on the cost of debt for firms. Finally, our results reveal that open government data facilitate firms' borrowing of both long-term loans and loans without third-party guarantees. Our study thus demonstrates the value of open government data for creditors.

Suggested Citation

  • Xing, Qiuhang & Xu, Gaoshuang & Wang, Yanping, 2024. "Open government data and the cost of debt," International Review of Financial Analysis, Elsevier, vol. 95(PA).
    • Handle: RePEc:eee:finana:v:95:y:2024:i:pa:s1057521924003168
    DOI: 10.1016/j.irfa.2024.103384
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