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

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

Finance Research Letters, 2024, vol. 68, issue C

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.

Keywords: Bond market access; Bond issuance; Corporate financing (search for similar items in EconPapers)
JEL-codes: G32 G38 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:68:y:2024:i:c:s1544612324010237

DOI: 10.1016/j.frl.2024.105993

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