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Locational effects and the cost of corporate bonds: the role of information
Author(s) -
Hu Tao,
Hu Xiaolu,
Huang Haozhi,
Shi Jing,
Wang Hua
Publication year - 2019
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12547
Subject(s) - yield (engineering) , bond , business , geographical distance , economic geography , credit spread (options) , economics , finance , demography , population , materials science , sociology , metallurgy
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.