BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 33/2015:
Is it worth issuing bonds in China? Evidence from stock market reactions
Paul-Olivier Klein ()
and Laurent Weill ()
Abstract: There has been a considerable expansion of corporate bond
markets in China in the recent years. The objective of this study is to
examine the stock market reaction following bond issuance by Chinese
companies. In addition to analyzing for positive or negative reactions to
bond issues, we consider the influences of ownership and management
characteristics on the stock market reaction. Applying an event-study
methodology to a sample of 481 bond issues of 347 Chinese companies over
the period 2009–2013, the univariate results show that Chinese bond issues
typically generate a positive stock market reaction. The reaction is only
significantly positive, however, in the case of central state-owned
companies (as opposed to those owned by local or provincial governments).
The multivariate results indicate that insider ownership influences stock
market reaction to a bond issue, while management characteristics have no
discernable impact.
Keywords: China; emerging markets; corporate bonds; event study; (follow links to similar papers)
JEL-Codes: G14; P34; (follow links to similar papers)
37 pages, December 15, 2015
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