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Bond market access and corporate financing decisions: Evidence from a quasi-natural experiment

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  • Bai, Min
  • Qiu, Zihang
  • Yu, Chia-Feng (Jeffrey)

Abstract

This study investigates how bond market access affects corporate financing decisions. Employing a difference-in-differences approach based on a reform in China and a sample of listed firms from 2010 to 2020, we find significant increases in bond issuance and bond financing for firms with high ex-ante equity costs. The effect is stronger for firms not audited by Big 4 auditors, having more negative news coverage, and exhibiting less conservative accounting practices. While increasing bond financing, firms decrease bank loans and leave debt ratios unchanged. Our findings indicate that firms hop among financing sources based on market accessibility and capital costs.

Suggested Citation

  • Bai, Min & Qiu, Zihang & Yu, Chia-Feng (Jeffrey), 2024. "Bond market access and corporate financing decisions: Evidence from a quasi-natural experiment," Finance Research Letters, Elsevier, vol. 68(C).
    • Handle: RePEc:eee:finlet:v:68:y:2024:i:c:s1544612324010237
    DOI: 10.1016/j.frl.2024.105993
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    References listed on IDEAS

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    More about this item

    Keywords

    Bond market access; Bond issuance; Corporate financing;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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