Locational effects and the cost of corporate bonds: the role of information

Abstract

The public yield spreads of bonds vary widely between Chinese provinces/ municipalities, with the average for the highest province double that of the lowest one. Although we find that these patterns are mainly attributable to economic and legal conditions, locational effects like geographic distance and public firm credit ratings also appear to be contributory. We show that these effects are induced by different regional informational environments and are robust to controlling for potential endogenous location choices.

Board reforms and the cost of equity: International evidence

“…We also observe a significantly negative relationship between the firm's COE and GDP at the 5 percent level in Model (2), and MAL at the 10 percent level in Model (4). These results suggest that big firms and firms with better profit are more likely to have lower COE (Archer and Faerber, 1966;Fauver et al, 2017;Hu et al, 2019). Ritter (2005) finds a negative correlation between per capita income growth and real equity returns in 16 countries from 1900 to 2002; our findings regarding GDP also support this result.…”

The Effect of Firm Location on Corporate Dividend Policy: Study in Indonesia Capital Market

“…This depicts that firms that are situated beyond a financial hub have the drive to pay more dividends to their shareholders, signaling the presence of greater information asymmetry for such firms. This hypothesis of information asymmetry is consistent with the theories proposed by Hu et al (2019) and Chen et al (Chen, 2016), which states that location has a consequence related to information asymmetry.…”

Does economic policy uncertainty raise corporate precautionary cash holdings? Evidence from China

“…Geographical heterogeneities result in differences in economic development (Hu et al, 2019). In China, eastern regions outperform central and western regions in terms of economic performance.…”