Navigating through noise: Media's role in mitigating corruption's impact on bond markets in China

Zuoping Xiao, Jingjing Zai and Qiaoling Su

Research in International Business and Finance, 2025, vol. 79, issue C

Abstract: This study examines corruption's impact on China's bond market and the role of media attention amid flawed institutions. Analyzing corporate bonds from Chinese listed companies (2009–2022), it explores the relationships between corruption, media attention, and bond covenants. Results show that higher corruption correlates with smaller bond sizes, increased credit spreads, and stricter covenants. Media attention mitigates corruption's negative impacts on bond sizes and credit spreads, showing a U-shaped moderating effect on the corruption-covenant relationship. The findings are confirmed through tests including Instrumental Variables (IV), Propensity Score Matching (PSM), Heckman models, and Three-Stage Least Squares (3SLS). Tests indicate that corruption affects bond covenant design by influencing information asymmetry and agency conflicts. A heterogeneity analysis shows that media's effect is stronger in markets with greater marketization and investor focus.

Keywords: Corruption; Media Attention; Bond Size; Credit Spread; Bond Covenants (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:79:y:2025:i:c:s0275531925003319

DOI: 10.1016/j.ribaf.2025.103075

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