Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212926 
Year of Publication: 
2019
Series/Report no.: 
BOFIT Discussion Papers No. 18/2019
Publisher: 
Bank of Finland, Institute for Economies in Transition (BOFIT), Helsinki
Abstract: 
Drawing upon evidence from the Chinese corporate bond market, we study how ownership structure affects the cost of debt for firms. Our results show that state, institutional and foreign ownership formats reduce the cost of debt for firms. The benefits of state ownership are accentuated when the issuer is headquartered in a province with highly developed market institutions, operates in an industry less dominated by the state or during the period after the 2012 anti-corruption reforms. Institutional ownership provides the most benefits in environments with lower levels of marketization, especially for firms with low credit quality. Our evidence sheds light on the nexus of ownership and debt cost in a political economy where state and private firms face productivity and credit frictions. It is also illustrative of how the market environment interacts with corporate ownership in affecting the cost of bond issuance.
Subjects: 
Government ownership
institutional holding
credit spreads
market forces
JEL: 
G12
G18
G32
G34
Persistent Identifier of the first edition: 
ISBN: 
978-952-323-297-6
Document Type: 
Working Paper

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