Bond offerings in China: The role of ownership
Paulâ€ Olivier Klein and
Laurent Weill ()
The Economics of Transition, 2018, vol. 26, issue 3, 363-399
This study appraises the value created by a bond offering in China, where high levels of state ownership and insider ownership raise concerns about the use of the proceeds. To estimate the impact of a bond issue on the firm's value, we apply an eventâ€ study methodology on a sample of 481 issues of 347 Chinese companies over the period 2009â€“2013. It turns out that state ownership has a positive impact on the value of a bond offering for shareholders, which is consistent with an implicit guarantee of the issue by the state. For privately owned companies, insider ownership exerts a nonlinear impact on the firm's value, supporting an aligning effect in the use of the proceeds. Overall, the study confirms the key role of ownership structure in Chinese firms.
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