EconPapers    
Economics at your fingertips  
 

The signalling role of the government‐market relationship in debt financing: Evidence from China

Yuan Yuan and Ye Meng

Australian Economic Papers, 2024, vol. 63, issue 4, 667-686

Abstract: A proper government‐market relationship (GMR) serves as an important institutional environment for investors to make rational economic decisions. Theoretically, by embedding the GMR into the signalling model, this study finds that (a) the improvement in the GMR can enable high‐return firms to obtain more debt financing and (b) the mechanism is that a higher GMR, as a signal, increases the accuracy of investors' inference on firms' returns. Using data of Chinese A‐share listed firms (2009–2019) and the two‐step system GMM, this study empirically demonstrates that the GMR does help investors infer firms' returns more accurately, thus enlarging the debt financing scales of high‐return firms. Moreover, the positive impact of the GMR on high‐return firms is significant within privately owned firms and more substantial in markets characterised by lower industry concentration.

Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/1467-8454.12361

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:ausecp:v:63:y:2024:i:4:p:667-686

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0004-900X

Access Statistics for this article

Australian Economic Papers is currently edited by Daniel Leonard

More articles in Australian Economic Papers from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2025-03-19
Handle: RePEc:bla:ausecp:v:63:y:2024:i:4:p:667-686