Disclosure of regulatory information and creditor pricing decision: evidence from Chinese comment letters

Ning Hu, Yanan Cao, Nan Zhou and Shuang Xue

China Journal of Accounting Studies, 2020, vol. 8, issue 1, 97-120

Abstract: Using Chinese comment letters data, we investigate the impact of the disclosure of comment letters on the cost of debt financing. Empirical results show that when the comment letters are publicly disclosed, creditors charge borrowers significantly higher cost of debt financing. Furthermore, when more questions or risk factors are contained in the comment letters or when professional opinions from a third party are requested to issue, the cost of debt financing is further higher. However, when the comment letters are not publicly disclosed, the cost of debt financing is not affected. In cross-sectional test, we find that the degree of regional market development and the characteristics of debtor both affect the relationship between cost of debt financing and comment letters. Our research not only supplements the literature on the economic consequences of comment letters from the perspective of information effect, but also reveals the importance of public disclosure of regulatory information in semi-strong efficient market.

Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1080/21697213.2020.1813969 (text/html)
Access to full text is restricted to subscribers.

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:taf:rcjaxx:v:8:y:2020:i:1:p:97-120

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/rcja20

DOI: 10.1080/21697213.2020.1813969

Access Statistics for this article

China Journal of Accounting Studies is currently edited by Xiaochen Dou

More articles in China Journal of Accounting Studies from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().