Can high-quality interactions lower the cost of debt? Insights from interactive investor platforms

Yujie Zhao, Zhanghao Yao, Yuanqin Li and Ping Zhou

Finance Research Letters, 2023, vol. 58, issue PC

Abstract: With the data from online interactive investor platforms in China, we find that high-quality interactions between investors and listed companies lead to a reduction in the cost of debt. This effect is more pronounced in firms relying heavily on information, having weaker external monitoring, and boasting a more sophisticated board secretary. Furthermore, our findings indicate that high-quality interactions are also associated with longer-term loans and favorable bond covenants. Our findings have significant implications for improving the information environment of capital markets by highlighting the value of fostering transparent and effective communication channels between investors and firms.

Keywords: Interaction quality; Information efficiency; Debt financing; Cost of debt (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:58:y:2023:i:pc:s1544612323009728

DOI: 10.1016/j.frl.2023.104600

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