Author(s)

Minmin Zhang ¹

Affiliation(s)

¹ School of Economics and Management, Taishan University, Tai'an, Shandong, 271000, China

Corresponding Author

Minmin Zhang

ABSTRACT

The registration-based issuance system of enterprise bonds and corporate bonds has promoted the development of the bond market, and bond financing has become an increasingly important financing method for Chinese enterprises. Based on the analytical framework of ex-ante and in-event governance, and taking into account that the quality of information disclosure may be endogenous to the bond financing behavior, we have controlled the possible impact of the ex-ante governance effect of the new bond issue, focusing on the impact of bond financing during the duration of the bond. Bond financing enlarges the creditor supervision mechanism into the corporate stakeholder supervision mechanism by improving the quality of corporate information disclosure. We construct a mediation effect model based on the quality of information disclosure, and control the short-term impact of new bond issuance, and use sample data of listed companies in China for empirical analysis. Regarding the governance effect during the bond duration, the improvement of the quality of information disclosure can strengthen the role of bond financing in alleviating underinvestment, and has a mediation effect. On the other hand, it can alleviate the aggravating effect of bond financing on overinvestment, and there is a suppressing effect.

KEYWORDS

Bond Financing, Information Disclosure Quality, Investment Efficiency, Mediation Effect

CITE THIS PAPER

Minmin Zhang, Bond Financing, Information Disclosure Quality and Corporate Investment Efficiency. Financial Engineering and Risk Management (2023) Vol. 6: 14-23. DOI: http://dx.doi.org/10.23977/ferm.2023.061002.

REFERENCES

[1] Williamson, O. E. (2008) Corporate Boards of Directors: In Principle and in Practice, Journal of Law, Economics, & Organization, 24(2): 247-272.
[2] Liu, H. M. and Cao, T. Q. (2017) Impact of Credit Supply Cycle on Investment Efficiency and Heterogeneous Effect from Macroeconomic Uncertainty, Journal of Financial Research, 12, 80-94.
[3] Grossman, S. J. and Hart, O. D. (1982) Corporate Financial Structure and Managerial Incentives, The Economics of Information and Uncertainty, Chicago: University of Chicago Press, 107-140.
[4] Bai, J. and Gong, X. Y. (2017) Corporate Bonds and Value Creation: Financing Effects or Governance Effects? Journal of Financial Development Research, 10, 69-75.
[5] Wu, H. J., Liu, Q. R. and Wu, S. N. (2017) Corporate Environmental Disclosure and Financing Constraints, The Journal of World Economy, 5, 124-147.
[6] Gomariz, M. F. and Ballesta, J. P. (2014) Financial Reporting Quality, Debt Maturity and Investment Efficiency, Journal of Banking & Finance, 40, 494-506.
[7] Li, Z. S., Li, H., Ma, W. L. and Lin, B. X. (2017) Information Governance Effects of Short Selling and Margin Trading, Economic Research Journal, 11, 150-164.
[8] Biddle, G. C., Hilary, G. and Verdi, R. S. (2009) How does Financial Reporting Quality Relate to Investment Efficiency? Journal of Accounting & Economics, 48(2), 112-131.
[9] Lu, S., Wu, P., Jiang, Y. and Du, R. X. (2021) Can Social Media Information Disclosure of Companies Reduce Information Asymmetry? Comparative Study of GEM Market and Main Board Market, On Economic Problems, 10, 121-129.
[10] Chang, X., Dasgupta, S. and Hilary, G. (2009) The Effect of Auditor Quality on Financing Decisions, The Accounting Review, 84(4), 1085-1117.
[11] Bushman, R. M., Piotroski, J. D. and Smith, A. J. (2004) What Determines Corporate Transparency? Journal of Accounting Research, 42(2), 207-252.
[12] Choi, J. K., Hann, R. N., Subasi, M. and Zheng, Y. (2020) An Empirical Analysis of Analysts' Capital Expenditure Forecasts: Evidence from Corporate Investment Efficiency, Contemporary Accounting Research, 37(4), 2615-2648.
[13] Richardson, S. (2006) Over-investment of Free Cash Flow, Review of Accounting Studies, 11(2-3), 159-189.
[14] Zhang, C. and Liu, X. (2015) Disclosure of Internal Control Weakness Information and Corporate Investment Efficiency: An Empirical Research based on Chinese Listed Companies, Nankai Business Review, 5, 136-150.
[15] Wen, Z. L. and Ye, B. J. (2014) Analyses of Mediating Effects: The Development of Methods and Models, Advances in Psychological Science, 5, 731-745.
[16] Fang, Jie, Wen, Z. L. and Zhang, M. Q. (2017) Mediation Analysis of Categorical Variables, Journal of Psychological Science, 2, 471-477.
[17] Chen, F., He, O., Li, Q. Y. and Wang, X. (2011) Financial Reporting Quality and Investment Efficiency of Private Firms in Emerging Markets, The Accounting Review, 86(4), 1255-1288. 
[18] Wang, P., & Han, W. (2021). Construction of a New Financial E-Commerce Model for Small and Medium-Sized Enterprise Financing Based on Multiple Linear Logistic Regression. Journal of Organizational and End User Computing , 33(6), 1-18. 
[19] Drake, J. R., & Furner, C. P. (2020). Screening Job Candidates With Social Media: A Manipulation of Disclosure Requests. Journal of Organizational and End User Computing, 32(4), 63-84.

Sponsors, Associates, and Links

---

• Information Systems and Economics
  
  
• Accounting, Auditing and Finance
  
  
• Industrial Engineering and Innovation Management
  
  
• Tourism Management and Technology Economy
  
  
• Journal of Computational and Financial Econometrics
  
  
• Accounting and Corporate Management
  
  
• Social Security and Administration Management
  
  
• Population, Resources & Environmental Economics
  
  
• Statistics & Quantitative Economics
  
  
• Agricultural & Forestry Economics and Management
  
  
• Social Medicine and Health Management
  
  
• Land Resource Management
  
  
• Information, Library and Archival Science
  
  
• Journal of Human Resource Development
  
  
• Manufacturing and Service Operations Management
  
  
• Operational Research and Cybernetics