Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/338496 
Year of Publication: 
2023
Citation: 
[Journal:] China Journal of Accounting Studies (CJAS) [ISSN:] 2169-7221 [Volume:] 11 [Issue:] 2 [Year:] 2023 [Pages:] 207-246
Publisher: 
Taylor & Francis, Abingdon
Abstract: 
Using hand-collected data on merchant guild culture and a sample over 2003-2019, this study examines the effect of merchant guild culture on the cost of debt. Our findings reveal that merchant guild culture is negatively associated with the cost of debt, suggesting that merchant guild culture rooted in ancient China continuously affects corporate behaviour, builds the borrower-lender trust relationship by strengthening ethical standards of borrowers, and eventually reduces the cost of debt. The above findings are robust to a variety of sensitivity tests and using the PSM approach, two-stage IV regression procedures and regression discontinuity design to address the endogeneity. Moreover, channel tests show that merchant guild culture reduces the cost of debt by depressing the default risks. Furthermore, our main findings are more pronounced for firms in regions with lower extent of Marketisation and higher risk taking, firms with lower managerial ownership and lower ratio of independent directors.
Subjects: 
default risks
Merchant guild culture
soft information
the cost of debt
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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